September 5, 2007

 

CBOT Soy Outlook on Wednesday: Called 3-5 cents higher on overnight wheat rally

 

 

Chicago Board of Trade soybean futures are predicted to begin day time trading 3 to 5 cents higher Wednesday, supported by another sharp rally in wheat futures to new all-time highs in overnight trade, analysts said.

 

In overnight e-CBOT trading, Sep soybeans rose 3 1/4 cents to US$8.95 3/4 per bushel, and Nov gained 5 1/4 cents to US$9.12 3/4. E-CBOT volume in November was 12,645 contracts.

 

"So goes wheat, so goes the rest of the grains," an analyst said. The current fundamentals are a little negative with the crop in good condition and harvest activity expected to begin in the near-term, but with the steep gains in wheat overnight, soybeans will be higher on spillover, the analyst said.

 

In overnight trade, December wheat rallied 30 cents, or limit-up to US$8.35 1/2, a new all-time higher.

 

Tuesday afternoon, the U.S. Department of Agriculture reported that 56% of the U.S. soybean crop was in good-to-excellent condition, up one percentage point from the previous week and above analyst expectations of unchanged to down two percentage points. In Iowa, 73% of the crop was rated in good-to-excellent condition, down two percentage points from last week while in Illinois, 55% of the crop was rated in good-to-excellent condition, up two percentage points from the previous week. Fourteen percent of the crop was dropping leaves compared to the five-year average of 11%.

 

In the western U.S. Midwest there is a chance for a few showers and scattered thundershowers Thursday of Friday with amounts of 0.10-0.60 inch and locally heavier, DTN Meteorlogix Weather said. Temperatures are expected to average near to above normal.

 

In the eastern U.S. Midwest, there is a chance for scattered showers with amounts of 0.10-0.75 inch Thursday into Friday with temperatures expected to average above to well above normal in the period, Meteorlogix Weather said.

 

In the 6- to 10-day forecast, temperatures are expected to average near to below normal and rainfall is forecast to average near to below normal, except in the extreme east and northwest where it may possibly be near to above normal.

 

On daily technical charts, November soybeans closed nearer the session high and hit a fresh six-week high and market bulls gained more good technical momentum by closing prices above strong resistance at US$9.00 per bushel, as strong wheat prices spilled over into soybeans, a technical analyst said. However, any price weakness in wheat futures will quickly spillover into soybeans, the analyst said.

 

The bulls' next upside price objective is closing prices above the November contract high of US$9.49 1/2, with the next downside price objective for market bears is closing prices below solid support at US$8.88.

 

First resistance is seen at US$9.15, Tuesday's high and then at US$9.22 3/4, which is a gap area on the daily charts. First support is seen at US$9.00, and then at US$8.93 1/2.

 

Deliveries posted against the Chicago Board of Trade September soybean future were 1,546 contracts. Large issuers included the customer account of Man Professional Clearing which issued 693 contracts and the customer account of Shatkin which issued 238 contracts. Large stoppers included the customer account of Man Professional Clearing, which stopped 833 contracts, and the customer account of Kottke, which stopped 175 contracts. The last trade assigned was Sept. 2004.

 

In overseas markets, crude palm oil futures were higher on the Bursa Malaysia Derivative Exchange with the benchmark November contract up MYR36 at MYR2,495/tonne

 

Soybean futures on China's Dalian Commodities Exchange settled lower on profit taking, analysts said. The benchmark May 2008 contract settled down RMB5 at RMB3,879 per metric tonne.