August 20, 2008

 

CBOT Soy Outlook on Wednesday: Seen stronger on outside influence

 

 

Soybean futures on the Chicago Board of Trade are called to open Wednesday's day session higher as strength in the Chinese market, palm oil, add to the bullish signals offered by stronger crude, gold and silver.

 

CBOT soybean futures are called 18 to 20 cents higher.

 

After a mixed-trade Tuesday in which prices hit a three-week high before selling-off into the close, "it's hard to find people that want to trade into that volatility," a CBOT floor trader said.

 

While many investors watch the fluctuating trade from the sidelines, small trades are causing large swings in the soy market, traders said.

 

In his daily Gartman Letter, financial advisor Dennis Gartman noted that corn and to a slightly lesser extent soybeans are "breaking rather well defined downward sloping trendlines extending back into late June and/or early July," and he noted, "we want to add to our long positions immediately."

 

In overnight electronic trading, September soybeans were 20 cents higher at US$12.87 and Nov soybeans rose 21 1/4 cents to US$12.97 1/4. December soyoil was 15 points lower at 53.18 cents per pound and December soymeal was US$3.20 cents lower at US$347.50 per short tonne.

 

"Profit-taking pressure from limit-up gains on Monday was featured in beans Tuesday," a market technician said.

 

The next upside price objective for the bean bulls is to push and close prices above solid technical resistance at Tuesday's high of US$13.41 a bushel on the November contract.

 

Sold technical resistance is seen at US$13.41 a bushel, with first resistance at US$13, he said, whereas the bears must pierce and close below the US$12.50 per bushel level to penetrate solid technical support, the technician said. First support is seen at Tuesday's trading low of US$12.58, he said.

 

Scouts on the western leg of the 2008 Pro Farmer Midwest Crop Tour reported a 0.6% decline in soybean pod counts from 2007's totals.

 

The average soybean pod count in a three-foot by three-foot square collected from the six Nebraska cropping districts sampled Monday and Tuesday was 1,136.08.

 

Scouts reiterated the great variance in pod counts among fields, the increasing pressure of extended dryness and noted many aphid infestations met with appropriate farmer response.

 

The overall consensus is that the crop has good potential, with soybeans possibly adding bushels to yields if they receive a good finishing rain.

 

On the eastern leg of the tour, soybean pod counts climbed in Indiana, with an average pod count in a three-foot-by-three foot area of 1,298.77, up from last year's average of 1,169.47 and slightly above the three-year average of 1,294.88.

 

Scouts observed soybean plants in western Indiana and eastern Illinois that were often thigh-high. In Ohio and eastern Indiana, soybean plants were generally below the knee participants said.

 

The extent of the dry soils across the eastern Corn Belt has surprised scouts.

 

On Friday at 10 a.m. EDT, Pro Farmer will release its official crop estimate, based in part on the figures collected by tour participants.

 

Dryness is expected to continue across the Corn Belt, except for a some light, scattered showers toward the far western end of the region, said the DTN Meteorlogix forecast.

 

The widespread dryness will likely continue through the weekend, interrupted by a few scattered thunderstorms, the private weather forecasting firm said.

 

Temperatures will stay in a near-to-above normal range, Meteorlogix said.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Wednesday on higher cash soyoil prices.

 

The benchmark January 2009 soybean contract settled up RMB86, or 2.1%, at RMB4,261 a metric tonne, after trading in a range of RMB4,215-RMB4,332/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended 6.4% higher Wednesday on strong export numbers, estimated at an 8-month high, and on a large discount to soyoil prices.

 

The benchmark November contract on Bursa Malaysia Derivatives ended MYR155 higher at MYR2,591/tonne, recovering most of the losses of the past week.