July 30, 2008

 

CBOT Soy Outlook on Wednesday: Steady tone; outside influences mixed

 

 

Soybean futures at the Chicago Board of Trade are seen starting Wednesday's day session with a steady undertone, holding in a range amid a lack of news and mixed outside market influences.

 

CBOT soybean futures are called 2 cents higher to 2 cents lower.

 

In overnight electronic trading, August soybeans were 1 1/4 cents higher at US$13.85 1/2 and November soybeans were 1/4 cent lower at US$13.90 3/4. December soyoil was 2 points higher at 59.10 cents per pound and December soymeal was US$0.50 higher at US$370.00 per short tonne.

 

The market is poised for more of a steady to firm start, chopping around, as a lack of a sustained weather threat and mixed outside signals open the door for consolidative action, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

Hot, humid conditions are on tap for Midwest crops, but the heat is not expected to linger more than a few days and that does not promote confidence for bullish traders to aggressively add risk premium, analysts said.

 

However, the uncertainties of longer term weather as soybeans move into their critical growing month of August should keep prices underpinned, particularly with heat and dryness lingering in the U.S. Delta and southeast, Scoville added.

 

Meanwhile, market bulls were a bit disappointed with soybean's inability to find follow-through buying on early overnight gains, and that may promote some hesitancy among buyers, traders said.

 

Futures are seemingly setting into a trading range awaiting more definitive crop prospects, with the active November future finding support near the pre-June flooding highs, a CBOT floor broker said. Futures have effectively extracted the June weather premium. Traders will keep an eye on crude oil futures, with a government stock report on petroleum inventories scheduled for release at 10:30 a.m. EDT, a broker adds.

 

A market technician said the next upside price objective for November soybeans is to push and close prices above solid technical resistance at US$14.50 a bushel. The next downside price objective is pushing and closing prices below solid technical support at Tuesday's low of US$13.51.

 

First resistance for November soybeans is seen at Tuesday's high of US$14.02 3/4 and then at this week's high of US$14.21. First support is seen at US$13.75 and then at US$13.51.

 

The DTN Meteorlogix weather forecast continues to point to generally favorable weather for flowering soybeans with no persistent hot or dry weather indicated. A brief period of temperatures reaching the middle 90s Fahrenheit is possible early next week, especially over western areas before scattered showers and thunderstorms return during the middle part of next week, Meteorlogix forecasts.

 

In the U.S. Delta, above to much above normal temperatures and below normal rainfall will continue to stress developing soybeans, Meteorlogix adds.

 

In overseas markets, China's palm oil futures traded on the Dalian Commodity Exchange settled sharply lower Wednesday on policy concerns related to the upcoming Olympic Games. The benchmark September 2008 palm oil contract settled RMB266 lower at RMB8,672 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher Wednesday, erasing intraday losses on likely rise in exports, trade participants said. The benchmark October contract on Bursa Malaysia Derivatives ended MYR23 higher at MYR2,992 per tonne.