May 16, 2007

 

CBOT Soy Outlook on Wednesday: Up 2-4 cents; follow through, tech momentum

 

 

Soybean futures on the Chicago Board of Trade are seen starting Wednesday's day session higher, in tune with overnight price action as bullish technical momentum and crop uncertainties underpin in the absence of fresh news.

 

CBOT soybean futures are called to start the session 2 to 4 cents higher.

 

In overnight e-CBOT trading, July soybeans were 3 1/4 cents higher at US$7.81 1/4 per bushel, and November gained 3 1/2 cents to US$8.10 1/2.

 

The market is poised to extend its supportive theme, with follow-through buying from Tuesday and the unwillingness of traders to short the market until the 2007 crop is firmly in the ground is keeping buyers in early command, analysts said.

 

A quiet news front will keep the latest weather forecasts and technical factors serving as indicators of near term direction, a CBOT floor analyst said.

 

However, traders question the sustainability of the rally if speculative fund buying dries up. The market has pushed into overbought territory, with speculative funds aggressively buying the market for three straight days.

 

This scenario leaves the market overdue for a mild consolidative correction, analysts added.

 

A technical analyst said market bulls have gained solid upside technical momentum recently, amid fresh fund buying and talk of a hotter and drier summer in the Corn Belt. The next upside price objective for the bulls is closing prices above major psychological resistance at US$8.00 basis July futures. The next downside price objective is closing prices below solid support at US$7.50.

 

First resistance for July soybeans is seen at Tuesday's high of US$7.81 3/4 and then at US$7.85. First support is seen at US$7.75 and then at Tuesday's low of US$7.69.

 

The DTN Meteorlogix Weather Service forecast said there is a slight chance for frost Wednesday night in the western Midwest, but it shouldn't cause significant problems for emerging crops. Planting weather should be favorable for about 5 days. In the eastern Midwest, wet conditions Wednesday due to Tuesday's rainfall may cause field work delays. A chance for frost in some northern and eastern areas is not expected to be a significant problem for emerging crops.

 

In overseas markets, soybean futures settled higher on the Dalian Commodity Exchange on Wednesday, following Tuesday's gains in CBOT soybeans. The benchmark September 2007 contract moved RMB29 higher to RMB3,238 a metric tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply higher Wednesday, boosted by speculative buying on supply concerns and fundamentals that remain bullish overall despite disappointing export data released Tuesday. The benchmark August contract ended at MYR2,323 a metric tonne, up MYR27.