June 21, 2006

 

CBOT Soy Outlook on Wednesday: Up 1-2 cents; following overnight theme

 

 

Soybean futures on the Chicago Board of Trade are expected to start Wednesday's open auction session modestly higher, following the overnight trend as the market consolidates recent declines.

 

Soybeans are called to open one to two cents higher.

 

In overnight electronic trade, July soybeans were 1/2-cent higher at US$5.87, November soybeans were 1 1/4-cents higher at US$6.13 1/4, July soymeal was US$0.40 higher at US$177.70 and July soyoil was 3 points higher at 24.31 cents per pound.

 

The absence of fresh news is expected to produce some consolidative action, but with non-threatening weather conditions across the Midwest, choppy sideways trade is expected once again, analysts say.

 

Light support is seen from expectations for lower planted soybean acres in the U.S. Department of Agriculture's June 30 acreage report. The unwillingness of the trade to fully extract weather premium with a long growing season still ahead is limiting downside movement, but as long as weather remains favorable, analysts anticipate prices will continue to grind lower in sideways fashion.

 

Meanwhile, technical analysts say prices are still in a choppy trading range on the daily bar chart, and in the lower portion of it. The next upside price objective for July soybeans is closing prices above psychological resistance at US$6.00. A close back below technical support at this month's low of US$5.75 1/2 would provide better downside technical momentum.

 

First resistance for July soybeans is seen at US$5.86--Tuesday's high, US$5.91 1/2--this week's high--and then at US$5.95. First support is seen at US$5.82--Tuesday's low--and then at US$5.80.

 

The DTN Meteorlogix Weather Service forecast said scattered showers and thundershowers will occur mainly from southern Nebraska and southern Iowa southward during Wednesday and Thursday. Thundershowers may redevelop in northern areas Friday night, otherwise Friday is mainly dry. Temperatures will average near to above normal Meteorlogix said.

 

In the eastern Midwest, episodes of scattered showers and thundershowers through north and central areas will be common Wednesday and Thursday and in the south later Thursday and Friday. Rainfall should average 0.30-1.00 inch during this period. Temperatures will average above normal Wednesday, near to above normal Thursday, and near to below normal Friday, Meteorlogix said.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Wednesday, cash dealers said. Spot cash soybean bids were up 2 cents in Des Moines, IA, up 2 cents in central Ill, and up 3 cents in St Louis, MO, according to cash sources Wednesday.

 

Rotterdam soybeans and soymeal prices were mixed. European vegoils were mixed.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled a tad higher, as advances in other commodities futures and marginal gains in overnight Chicago Board of Trade soybean futures lent support, analysts said. The benchmark September 2006 soybean contract rose RMB8 to settle at RMB2,608 a metric tonne, after trading between RMB2,604/tonne and RMB2,612/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended moderately higher Wednesday as the market continued to move within narrow ranges. The benchmark September CPO contract closed at MYR1,458 a metric tonne, up MYR7 from Tuesday.