June 6, 2007

 

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

 

 

Chicago Board of Trade soybean futures are poised to start Wednesday's day session higher, taking its cue from overnight action, with technical momentum and lingering weather issues underpinning prices, analysts said.

 

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$8.31 1/2 per bushel, and November was 2 3/4 cents higher at US$8.62.

 

Fresh market moving news remains limited, keeping bullish technical enthusiasm as a driving force for prices, analysts said.

 

Longer-term supply and demand issues of shrinking inventories in the 2007-08 marketing year continue to provide justification for the higher price theme, as the market attempts to secure increased South American acres next year, analysts added.

 

Lingering talk of a moisture blocking ridge forming in the U.S. Midwest is aiding the supportive theme, but traders say technical momentum remains a driving influence to keep speculative buyers enthused, a CBOT floor analyst said.

 

However, overbought market conditions, the absence of fresh news to feed market bulls, and a profit taking setback in Malaysian palm oil overnight after initially setting new highs may open the door for selling to emerge, he added.

 

A technical analyst said the market has solid upside momentum, with the next upside price objective for July soybeans is closing prices above solid technical resistance at US$8.50. The next downside price objective is closing prices below solid support at US$8.00.

 

First resistance for July soybeans is seen at Tuesday's contract high of US$8.29 1/2 and then at US$8.35. First support is seen at Tuesday's low of US$8.22 and then at US$8.15.

 

The DTN Meteorlogix Weather Service forecast said U.S. and European models are in fair to good agreement during the next 6-10 days. There continues to be some tendency for ridging over the eastern and southern Midwest, the Delta, the Mid-Atlantic and southeast.

 

Near term, showers and thunderstorms will maintain favorable moisture conditions for emerging and developing crops in the western Midwest. Meanwhile, the eastern Midwest will turn hot Thursday but then somewhat cooler again heading into the weekend. This region may gradually trend drier during the 10-day period, although some sections could have thundershowers, Meteorlogix reports.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended lower Wednesday on profit-taking after the market rallied to a fresh record high in the morning. The benchmark August contract ended down MYR81 at MYR2,620 a metric tonne.

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday after CBOT futures rallied to new highs Tuesday. The benchmark January 2008 soybean contract settled RMB33 higher at RMB3,374 a metric tonne.