July 19, 2006

 

CBOT Soy Outlook on Wednesday: Down 3-5 cents, e-CBOT theme, tech weakness

 

Analysts anticipate a lower start for Chicago Board of Trade soybean futures, following the overnight theme, as technical weakness and a lack of supportive feature promote defensive activity.

 

Soybeans are called to open 3 to 5 cents lower.

 

In e-CBOT trade, November soybeans were 5 1/2 cents lower at US$6.05 1/2 per bushel.

 

Without a hot and dry weather pattern heading into the soybean crop's critical pod filling stage of development coupled with technical pressures and the absence of fresh news, futures are poised for early weakness, said a CBOT commission house broker.

 

Mild weekend temperatures across the Midwest with pop up showers is promoting the lower tone, with the ability of futures to penetrate underlying support levels are keeping buyers cautious in the face of ample old crop inventories, traders added.

 

Technical analysts said the market has gained good downside technical momentum in recently, with this month's high of US$6.39 1/2 in November soybeans very strong overhead resistance to overcome. Futures will have to push prices above that level to gain solid upside technical momentum, while the next downside price objective is major psychological support at US$6.00.

 

First resistance for November soybeans is seen at US$6.14 - Tuesday's high - and then at US$6.18. First support is seen at US$6.07 1/2 - Tuesday's low - and then at US$6.00.

 

The DTN Meteorlogix Weather Service forecast said hot and mostly dry weather is expected to stress reproductive corn and soybeans in the western Midwest through Thursday. Cooler temperatures and some scattered shower activity surfaces Friday and Saturday, but overall this continues to be a drier and warm to hot weather pattern for this region, Meteorlogix said. In the eastern belt, any thunderstorm activity during the next few days will be more important for northern or far southern areas of the region. Temperatures will be hot Wednesday and Thursday, and cooler during Friday and the weekend, Meteorlogix added.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Wednesday, cash dealers said. Spot cash soybean bids were up 2 1/2 cents in Peoria, Ill., and up 3 cents in St. Louis, Mo., according to cash sources Wednesday.

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Wednesday, weighed down by slight losses on the Chicago Board of Trade, an analyst said. The benchmark September contract settled unchanged at RMB2,470 a metric tonne, after trading between RMB2,467 and RMB2,475/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Wednesday, dragged down by weakness in other competing commodities such as soyoil and crude oil. The benchmark October CPO contract ended at MYR1,540 a metric tonne, down MYR15 from Tuesday.