July 11, 2007

 

CBOT Soy Outlook on Wednesday: Up 2-4 cents; e-CBOT, weather concerns

 

 

Chicago Board of Trade soybean futures are seen starting Wednesday's day session on firm footing, taking its cue from overnight trade, with longer range weather concerns an underpinning feature.

 

CBOT soybean futures are called to start the session 2 to 4 cents higher.

 

In overnight e-CBOT trading, July soybeans were 2 1/4 cents lower at US$8.86 3/4 per bushel, and November was 3 cents higher at US$9.23 1/2.

 

The market is poised for a firm start, with an overnight rise to new contract highs, concerns over forecasts for a return to hot, dry weather next week in the Midwest and technical momentum supporting prices, analysts said.

 

The market is seen receiving a boost from outlooks for bullish data in Thursday's supply and demand report, with strength in palm oil futures expected to lend strength to soyoil as well, analysts add.

 

Meanwhile, bullish technical momentum is aiding the advances. Traders are also expected to keep an eye on the Brazilian Real after it rallied to a fresh seven-year high Tuesday as the dollar weakened against currencies worldwide.

 

"With the strength in the Real, new crop prices may need to continue to rally if the market wants to entice Brazilian producers to increase planted acreage in the next marketing year to make up for smaller US acreage in 2007," a market analyst said.

 

A market technician said market bulls have the strong technical advantage and are looking for more on the upside in the near term. The next upside price objective for November soybeans is closing prices above solid technical resistance at US$9.50. The next downside price objective is closing prices below solid support at US$8.90.

 

First resistance for November soybeans is seen at Tuesday's contract high of US$9.22 1/4 and then at US$9.25. First support is seen at Tuesday's low of US$9.07 and then at US$9.00.

 

The DTN Meteorlogix Weather Service forecast said mainly dry conditions are on tap for Wednesday in the western Midwest. A chance for a few sprinkles or light showers, favoring southern areas is seen for Thursday, with dry conditions returning Friday. Temperatures will average below normal during this period. Looking ahead to the weekend, dry conditions are on tap, with temperatures averaging near to below normal Saturday, and near to above normal Sunday.

 

In the eastern Midwest, showers may linger early Wednesday in extreme southeastern parts of the region, with dryness seen elsewhere in the region. A chance for sprinkles and a few light showers during Thursday, favor southern and eastern areas. Mainly dry conditions return Friday, with temperatures averaging near to below normal Wednesday and Thursday, and below normal Friday, Meteorlogix forecasts.

 

In demand news, Taiwan Sugar Corp. bought 16,000 tonnes of U.S. soybeans from trading house Columbia Grains in a tender concluded Wednesday, a trader in Taipei said.

 

Deliveries notices posted against July soybean futures totaled 2,664 lots. A customer account at Man Professional Clearing issued 1,192 lots, and stopped 848 lots. The last trade date assigned was July 10.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended higher Wednesday, with the benchmark contract reaching a five-week high, amid lingering concerns about falling global edible oil production. The benchmark September contract ended at MYR2,584 a metric tonne, up MYR54 from Tuesday.

 

On Singapore's Joint Asian Derivatives Exchange, the September CPO futures contract was US$11 higher at US$747/tonne. Total traded volume was thin at 73 lots.

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday after their counterparts at CBOT set new record highs again Tuesday. The benchmark January 2008 soybean contract settled RMB49 higher at RMB3,328 a metric tonne.