May 23, 2007

 

CBOT Soy Outlook on Wednesday: Up 2-4 cents on e-CBOT, weather concerns

 

 

Chicago Board of Trade soybean futures are seen starting Wednesday's day session firmer, in line with overnight gains, as dryness concern for the eastern Midwest underpins.

 

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

 

In overnight e-CBOT trading, July soybeans were 3 3/4 cents higher at US$7.97 per bushel, and November were 4 1/4 cents higher at US$8.26 1/2.

 

The market is poised for early advances, as traders remain focused on dryness issues for the eastern Midwest, with private forecasters pointing to a slightly drier forecast than Tuesday's outlooks, analysts said.

 

However, some analysts anticipate prices will trend sideways, with early advances a selling opportunity as speculative traders look to reduce risk as the market approaches a long three-day Memorial Day holiday weekend. CBOT markets will be closed Monday in observance of the Memorial Day holiday.

 

The market looks a bit top heavy, with old crop contracts seen receiving pressure from plentiful nearby inventories, a CBOT floor analyst said. Nevertheless, crop uncertainties heading into a long growing season and the need to encourage South America to expand acreage in the next marketing year remains an underpinning feature for new crop futures, he added.

 

Meanwhile, a technical analyst said Tuesday's price declines produced no chart damage, but market bulls do not want to see strong follow-through selling pressure on Wednesday. Soybeans still have some upside technical momentum. The next upside objective for July soybeans is closing prices above solid technical resistance at this week's high of US$8.03. The next downside price objective is closing prices below solid support at US$7.80.

 

First resistance for July soybeans is seen at US$8.00 and then at US$8.03. First support is seen at Tuesday's low of US$7.91 and then at US$7.88.

 

The DTN Meteorlogix Weather Service forecast said rain and thunderstorms will maintain favorable moisture conditions for emerging and developing crops in the western Midwest crop belt. However, any shower activity during the next 10 days in the eastern Midwest is expected to be on the light side. This is not a completely dry weather pattern for the area but it should feature below-normal rainfall, Meteorlogix reports.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly lower Wednesday, following Tuesday's losses in the CBOT soybeans. The September 2007 soybean contract settled RMB11 lower at RMB3,240 a metric tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended mixed after yet another choppy trading day Wednesday as the market continued to grapple for direction following a recent rally to a near nine-year high. The benchmark August contract ended at MYR2,389 a metric tonne, up MYR14 from Tuesday.