June 27, 2007

 

CBOT Soy Outlook on Wednesday: Mixed; positioning ahead of Friday's reports

 

 

Chicago Board of Trade soybean futures are expected to start Wednesday's day session with a mixed undertone, as the market continues to position itself ahead of Friday's acreage and stocks reports.

 

In overnight e-CBOT trading, July soybeans were unchanged at US$8.07 per bushel, and November was 1 1/2 cent lower at US$8.40 1/2.

 

A quiet news front is expected to produce a choppy atmosphere, with spotty rains moving across the Midwest expected to keep position squaring a featured attraction, analysts said.

 

However, underlying strength from longer range bullish fundamental outlooks and expected price strength from neighboring wheat futures are seen providing underlying support to limit downside movement, analysts added.

 

A technical analyst said no serious chart damage has occurred from the market's recent sell-off, with the bulls maintaining a technical advantage. The next upside price objective for November soybeans is closing prices above solid technical resistance at US$8.47 1/2, which would fill on the upside last week's downside price gap on the daily bar chart. The next downside price objective is closing prices below solid support at last week's low of US$8.25.

 

First resistance for November soybeans is seen at US$8.47 1/2 and then at US$8.50. First support is seen at Tuesday's low of US$8.37 1/2 and then at US$8.30.

 

The DTN Meteorlogix Weather Service forecast said there will be less of a ridge for the Midwest region during the 6-10 day period. This suggests that any hot weather for the Midwest region early next week will be short lived.

 

Hot weather early next week in the western Midwest is not expected to last long enough to significantly impact crops. However, the drying trend may continue for the central Minnesota region. In the eastern Midwest, a few more thunderstorms yesterday helped some fields within the region but Ohio and eastern Indiana are still in need of a general rain, Meteorlogix reports.

 

The U.S. Department of Agriculture is scheduled to release its annual acreage and quarterly grain stock reports Friday at 8:30 a.m. EDT (1230 GMT). The average of 20 analysts' estimates pegged 2007 soybean acreage at 67.838 million acres, up from the prospective planting figure of 67.140 million. The average was from a range of 66 million to 69 million acres. Quarterly grain stocks were pegged at 1.076 billion bushels from a range from 909 million to 1.120 billion. Fifteen analysts participated in the stocks survey.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended slightly lower Wednesday as the market remained in a downtrend, pressured by weakness in other related commodities such as crude oil and expectations of higher inventories. The benchmark September contract ended at MYR2,334 a metric tonne, down MYR14 from Tuesday.

 

On Singapore's Joint Asian Derivatives Exchange, volume was thin at 37 lots. September CPO ended at US$672.50/tonne, down US$6.

 

Soybean futures traded on the Dalian Commodity Exchange settled mixed Wednesday, and the market may near the bottom after a recent fall. The benchmark January 2008 soybean contract settled RMB12 lower at RMB3,205 a metric tonne, after trading between RMB3,187/tonne and RMB3,226/tonne.