August 30, 2006

 

CBOT Soy Outlook on Wednesday: Steady-firm as market holds near support

 

 

Soy complex futures at the Chicago Board of Trade are expected to trade steady to firmer on Wednesday, following overnight gains as soybeans hold near technical chart support levels.

 

Farmer selling is also very light, which could limit losses.

 

Most-active November soybeans are called to open steady to 1 cent firmer.

 

In e-cbot trade, November soybeans finished the overnight session unchanged at US$5.51 a bushel. Soymeal was down 40 cents at US$161.30 a short tonne while soyoil rose 15 points to 25.23 a pound.

 

News for soybeans continues to be thin, with the market still focused on the weather and the looming big harvest in another month or so. "We get a little bit of rain, it stops, we get a little bit of rain. The temperatures are little cool, but there's not talk about frost," a floor-based analyst said.

 

DTN Meteorologix said while Midwestern weather conditions are favorable for filling crops, the recent cool, wet weather isn't helpful for maturing crops. For Wednesday to Friday, dry conditions, or with only a few light showers are expected in northeast areas during Wednesday, with conditions mainly dry during Thursday.

 

There is a chance for showers developing in the far west and in far eastern areas during Friday, although these should be mostly light to locally moderate. Temperatures are seen averaging mostly near normal. Into the weekend, showers are forecast for the west and central regions and temperatures are likely to be near to mostly below normal across the region.

 

In the Delta, late-filling soybeans could still be under stress due to dryness.

 

While the supply factor will limit any significant upside for soybeans, several analysts pointed out November soybeans haven't wanted to break the market with any conviction under the US$5.50 region. Considering November soybeans are holding just above that area, downside action could be limited.

 

With soybeans pushing multi-month lows, a technical analyst said bears have the solid technical advantage. The next downside price objective for the bears is a close under that US$5.50 area for November futures. Bulls would need to close November futures above US$5.70 to change technical momentum. First resistance for November soybeans is seen at US$5.54 3/4 and then at US$5.56 3/4. First support is seen at US$5.50 and then at US$5.45.

 

Export news is deemed routine. Taiwan seeks 50,000 metric tonnes of U.S.-origin soybeans in a tender to be concluded Thursday. If the soybeans are shipped from the U.S. Gulf, it is to reach Taiwan by Oct. 8-23, or Oct. 23-Nov. 7 if shipped from the Pacific Northwest. As with corn, the floor analyst said there are hopes of decent export business in Thursday's weekly export sales report from the U.S. Department of Agriculture as the market has held near multi-month lows.

 

The U.S. Department of Agriculture promised nearly US$800 million in aid Tuesday to ranchers and farmers hit by a near-record drought, on top of US$4 billion in crop insurance the government expects to pay out this year.

 

In other news, Rotterdam and soybean prices were mixed and soymeal was mostly steady to firmer. European vegoils were mixed.

 

Crude palm oil futures on the Bursa Malaysia Derivatives rallied on short covering, snapping a four-day losing streak. The benchmark November CPO contract ended at MYR1,578 a metric tonne, up MYR21.

 

Soybean futures traded on China's Dalian Commodity Exchange rose on an upward correction. The most active January 2007 contract settled RMB6 higher at RMB2,530 a metric tonne.