August 8, 2007

 

CBOT Soy Outlook on Wednesday: Up 3-5 cents; following e-CBOT theme

 

 

Chicago Board of Trade soybean futures are expected to start Wednesday's day session on firm footing, taking their cue from overnight action, analysts said.

 

CBOT soybean futures are called to start the session 3 to 5 cents higher.

 

In overnight e-CBOT trading, August soybeans were 5 1/2 cents higher at US$8.44 per bushel, and November was 4 1/4 cents higher at US$8.67.

 

Follow through buying from Tuesday's bounce is expected to influence early trade, with short covering ahead of Friday's crop reports and lingering concerns over heat and dryness in the southern U.S. soybean belt serving as catalysts for the gains, analysts said.

 

Nevertheless, the market continues to hover in a sideways trading pattern, with analysts anticipating the trend will continue until a clear picture of yield potential is made, a CBOT floor analyst said.

 

Underlying bullish sentiment and technical strength is expected to keep a floor under prices in the absence any fresh bearish inputs, he added.

 

A technical analyst said the next downside price objective for November soybeans is closing prices below solid support at the July low of US$8.34. The next upside price objective is pushing prices above solid technical resistance at US$8.69 1/2, which would fill on the upside a downside price gap on the daily bar chart.

 

First resistance for November soybeans is seen at Tuesday's high of US$8.64 and then at US$8.69 1/2. First support is seen at US$8.55 and then at US$8.50.

 

U.S. Department of Agriculture is scheduled to release its August crop production and supply and demand reports Friday 8:30 a.m. EDT. The average of analysts' estimates pegged 2007 soybean production at 2.653 billion bushels, up from the July figure of 2.625 billion. The average was from a range of 2.550 billion to 2.722 billion bushels. Ending stocks were pegged at 589 million bushels from a range of 575 million to 603 million.

 

The DTN Meteorlogix Weather Service forecast said showers and thunderstorms will move through eastern Nebraska, most of Iowa and northern Missouri Wednesday or overnight. This activity may catch the southeast corner of Minnesota but the balance of the northern areas will probably miss out. Mainly dry conditions are on tap for Thursday. Mainly dry or only a few thundershowers are possible in the northwest Friday. Temperatures will average near to above normal Wednesday and Thursday and above normal Friday, Meteorlogix forecasts.

 

In the eastern Midwest, a chance for scattered showers and thunderstorms are possible for northern areas of the region Wednesday or Thursday. The south may see a few light showers during this time, mainly late Thursday, with mostly dry conditions Friday. Temperatures will average above to well above normal Wednesday and Thursday, near to above normal Friday. Highs of 97-102 Fahrenheit are expected through southern areas Wednesday and Thursday before it cools by a few degrees Friday, Meteorlogix forecasts.

 

August soybean deliveries totaled 1,469 lots. A customer account at Man Professional Clearing was the principal issuer of 456 lots, with stoppers scattered among various commission houses. The last trade date assigned was August 7.

 

In overseas markets, crude palm oil futures in Malaysia's derivatives exchange ended slightly higher Wednesday after a choppy session, as traders opted for short covering, believing the market may have fallen too far recently, analysts said. The benchmark October contract on Bursa Malaysia Derivatives ended at MYR2,500 a metric tonne, up MYR22 from Tuesday.

 

Soybean futures traded on the Dalian Commodity Exchange settled mostly higher Wednesday on limited supply and rising demand. The benchmark January 2008 soybean contract settled RMB9 higher at RMB3,428 a metric tonne.