June 18, 2008

 

CBOT Soy Outlook on Wednesday: Flat, mixed; cautious on acreage, Argentina

 

 

Chicago Board of Trade soybean futures are seen starting Wednesday's day session mixed in a continuation of the trend overnight, with uncertainties surrounding 2008 acreage and strike issues in Argentina promoting cautious activity.

 

CBOT soybean futures are called to start the session steady to mixed.

 

In overnight electronic trading, July soybeans were unchanged at US$15.58 and November soybeans were 2 cents lower at US$15.51. July soyoil was 15 points higher at 65.95 cents per pound, while July soymeal was US$0.60 lower at US$414.40 per short tonne.

 

The market struggled overnight, with the easing of tensions on tax issues in Argentina putting a halt on upside movement, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Talk of more soybean plantings due to flooded corn acreage is expected to provide some short-term pressure on prices, Roose added.

 

Nevertheless, some traders say the market continues to maintain a bullish undertone. But traders are taking a cautious approach before aggressively pushing prices to record highs in the face of the unknowns of acreage and demand, analysts said.

 

Meanwhile, logistical problems associated with Midwest floods are pressing interior basis levels while firming the basis at the U.S. Gulf of Mexico, Roose said.

 

The logistical problems for rail and barge are effectively rationing some export demand as importers shift some demand to Brazil, he added.

 

The DTN Meteorlogix weather forecast said rainfall over the western and southern Midwest during the next 3-5 days may be considered unfavorable, however this is not the wettest area of the Midwest region. Less rain over central and eastern Iowa and northwest and central Illinois is favorable as it allows fields to slowly dry out and rivers to slowly recede, Meteorlogix added.

 

A technical analyst said the next upside price objective for July soybeans is to push and close prices above solid technical resistance at the contract high of US$15.95 3/4 a bushel. The next downside price objective is pushing and closing prices below solid psychological support at US$15.00.

 

First resistance for July soybeans is seen at Tuesday's high of US$15.66 3/4 and then at this week's high of US$15.88 1/2. First support is seen at US$15.46 3/4 and then at Tuesday's low of US$15.24.

 

Argentine President Cristina Fernandez said Tuesday she will ask the Congress to endorse a controversial grain export scheme at the heart of a three-month conflict with the farm sector.

 

Farm group leaders initially reacted positively to the news Congress would debate the tax.

 

"Things have changed, as there is hope for a democratic solution to the conflict," Argentine Agrarian Federation leader Alfredo de Angeli told reporters following Fernandez' speech.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Wednesday, following overnight gains at CBOT on weather concerns and the Argentine farmers' strike. The benchmark January 2009 soybean contract settled RMB72 higher at RMB5,054 a metric tonne, or up 1.4%, after trading between RMB5,001 and RMB5,090/tonne.