June 25, 2008
CBOT Soy Outlook on Wednesday: Up 10-14 cents on wet forecasts, cash strength
Soybean futures on the Chicago Board of Trade are seen firmer to start Wednesday's day session, buoyed by bullish weather forecasts and strength in the cash market.
CBOT soybean futures are called to start the session 10 to 14 cents higher.
In overnight electronic trading, July soybeans were 14 cents higher at US$15.15 and November soybeans were 12 1/2 cents higher at US$15.03 1/2. December soyoil was 48 points higher at 65.35 cents per pound and July soymeal was US$2.50 higher at US$403.80 per short tonne.
Forecasts for heavy rains to move through the Midwest and threaten previously flooded areas once again will serve as the catalyst for an early bounce in prices, said Vic Lespinasse, analyst with grainanalyst.com.
The rains threaten planting and replantings, as seeding soybeans at this point is very risky yield wise, but prices are providing a valued incentive for the risk, he added.
The DTN Meteorlogix weather forecast said the short range forecast continues to look wet and possibly very wet as storms develop across the U.S. Midwest. The long range outlook is a little more uncertain today as the US model has changed somewhat. However, Meteorlogix is keeping the threat of more storms in this region for the 6 to 10 day period.
Cash basis levels at the U.S. Gulf of Mexico jumped late Tuesday, rising some 15 to 20 cents, analysts said. The rise in the basis is sparking talk of fresh demand and that serves to provide for a tighter short term supply scenario, with transportation on the Mississippi River curtailed by high water levels, analysts added.
Some interior basis levels have bounced as well, with farmers tight fisted on old crop supplies.
However, a choppy two-sided theme may emerge once again, a CBOT floor broker said. "With the end-of-the-month and quarter approaching, we may still see funds lighten up positions and that should limit upside potential," he added.
A technical analyst said no serious chart damage has occurred on the market's recent correction, but market bulls are fading a bit. The next upside price objective for November soybeans is to push and close prices above solid technical resistance at the contract high of US$15.66 3/4 a bushel. The next downside price objective is pushing and closing prices below solid technical support at this week's low of US$14.73 3/4.
First resistance for November soybeans is seen at US$15.00 and then at Tuesday's high of US$15.17. First support is seen at Tuesday's low of US$14.80 1/4 and then at US$14.73 3/4.
In other news, despite disruptions caused by repeated strikes by farmers, Argentina's agricultural exports rose sharply during the first five months of the year, according to a report prepared by the government and presented to farm groups during talks Monday. Soybean exports from January through May totaled 3.8 million metric tonnes, up 18% from the same period a year earlier, according to the report.
China's Ministry of Commerce said Wednesday soybean, soymeal, soy oil, palm oil, rapeseed and rapeseed oil importers should report details of their cargoes to government departments and industry associations from Aug. 1.
The ministry said on its Web site domestic trading firms importing these commodities are required to report under the following conditions within three days -- signing contracts, shipping from the original ports, arriving at local ports, as well as any changes of reported items.
In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled slightly higher Wednesday on concerns over U.S. weather conditions. The benchmark January 2009 soybean contract rose RMB25 to settle at RMB4,927 a metric tonne.
Crude palm oil futures on Malaysia's derivatives exchange ended higher Wednesday on the news that Indonesia will hike its export tax on CPO to 20% next month, trade participants said. The benchmark September contract on the Bursa Malaysia Derivatives ended up MYR35 at MYR3,538 a metric tonne.
