July 18, 2007

 

CBOT Soy Outlook on Wednesday: Up 10-11 cents; tech bounce from recent plunge

 

 

Chicago Board of Trade soybean futures are expected to start Wednesday's day session on firm footing, following the overnight trend in a technical recovery from recent declines.

 

CBOT soybean futures are called to start the session 10 to 11 cents higher.

 

In overnight e-CBOT trading, August soybeans were 10 3/4 cents higher at US$8.44 1/2 per bushel, and November was 10 1/2 cents higher at US$8.71.

 

The market is poised for a rebound Wednesday, as the market attempts to stabilize after experiencing near 90 cent losses in the past two trading days, analysts say.

 

The market is still eyeing weather, but with near term weather forecasts unchanged, the market has adequately factored in nearby rain showers, a CBOT floor analyst said.

 

Traders have effectively trimmed length from futures, and with bullish longer range weather and fundamental outlooks still in play, a consolidative bounce maybe in order, traders said.

 

Nevertheless, the underlying theme of the market remains focused on longer term outlooks, with the uncertainty of 2007 crops with the critical growing period still ahead and the need to attract additional acreage next year seen as underpinning features, analysts added.

 

A technical analyst said serious near-term chart damage has now been inflicted in soybeans to suggest a major market top is in place. The next upside price objective for November soybeans is closing prices above solid technical resistance at US$8.75. Now, if soybeans can rebound strongly this week from the sharp early-week losses, to regain much of the lost price ground, then the bull market could then move forward, he said. The next downside price objective is closing prices below solid support at US$8.50.

 

First resistance for November soybeans is seen at US$8.65 and then at US$8.70. First support is seen at Tuesday's low of US$8.55 1/2 and then at US$8.50.

 

The DTN Meteorlogix Weather Service forecast said thunderstorms and cooler temperatures during the next few days will help to ease stress to reproductive soybeans in the western Midwest. Drier weather after that bears watching, especially in Minnesota and western Iowa where it has been drier than normal during recent weeks.

 

In the eastern Midwest, reproductive soybeans will benefit from widespread rain and thunderstorms along with cooler temperatures during the next few days, Meteorlogix said.

 

Meanwhile, the Meteorlogix 6-10 day outlook for the Midwest calls for temperatures to average near to above normal in western areas, and near to below normal in the eastern belt. Rainfall totals will average near to below normal west and central areas, and near to above normal east.

 

In overseas markets, crude palm oil futures on the Malaysia derivatives exchange ended slightly higher Wednesday, rebounding from recent losses in tandem with a recovery in soyoil. The benchmark October contract ended at MYR2,528 a metric tonne, up MYR11 from Tuesday.

 

On Singapore's Joint Asian Derivatives Exchange, CPO futures was higher, with the October contract up US$5 at US$732.50/tonne at 1000 GMT. Total traded volume was thin at 9 lots.

 

Soybean futures traded on the Dalian Commodity Exchange settled lower Wednesday after their counterparts at the Chicago Board of Trade posted sizable declines for the second consecutive day Tuesday. The benchmark January 2008 soybean contract settled RMB5 lower at RMB3,309 a metric tonne.