September 13, 2006

CBOT Soy Outlook on Wednesday: Flat to +1 cent, overnight e-CBOT, overdone

Soybean futures on the Chicago Board of Trade are seen starting Wednesday's session steady to firmer, in tune with overnight action as the market attempts to stabilize following a slide to new lows.

In e-CBOT trade, November soybeans were 1/4-cent higher at US$5.38 3/4 per bushel. Soybean futures are called to open steady to 1 cent higher.

Talk of overdone losses, combined with firm cash prices and forecasts for a possible frost in the northern Midwest next week is seen providing light support to prices, analysts said.

However, the market is poised to see some two-sided action, as the absence of fresh fundamental strength in the face of a large fall harvest and ample nearby supplies is seen sustaining a bearish price theme, said a CBOT commission house broker.

CBOT November futures set a new lows Tuesday as well as in overnight electronic trading. Expected price weakness in the neighboring corn and wheat markets are seen generating some pressure on the market also, traders added.

A market technician said November soybeans scored a bearish outside day down on the daily bar chart and hit a fresh contract low Tuesday, keeping market bears in technical control. It will take a close above technical resistance at US$5.70 to provide some fresh upside technical momentum, with the next downside price objective support at US$5.25.

First resistance for November soybeans is seen at US$5.45 and then at US$5.49--Tuesday's high. First support is seen at US$5.37 1/2--Tuesday's contract low--and then at US$5.35.

The DTN Meteorlogix weather forecasts says wet conditions will likely mean field work delays for the remainder of the week in the Midwest, including delays to the early harvest. Additional wet weather during the weekend is most likely for the northwest belt. Light showers will linger over the northern and eastern areas Monday, with mainly dry conditions Tuesday. Temperatures should be much cooler early next week, with low temperatures potentially dropping into the 30s Fahrenheit with frost possible in the northern locations by Tuesday morning, Meteorlogix reports.

U.S. Midwest cash soybean basis bids are mostly unchanged Wednesday. Spot cash soybean bids were up 7 cents in Sioux City, IA., up 1-cent in Frankfort, Ind., and down 1-cent in St. Louis, MO, according to cash sources Wednesday.

In deliveries, a total of 577 delivery notices were posted against the September soybean future. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was Sept. 12. 206 delivery notices recirculated against September soyoil. The last date trade assigned was Sept. 12. In soymeal, 31 delivery notices were posted against the September contract. The last trade date assigned was Sept. 7.

Rotterdam soybeans and soymeal were lower. European vegoils were mixed.

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Wednesday, pressured by Tuesday CBOT losses, analysts said. The most active January 2007 contract settled RMB5 lower at RMB2,538 a metric tonne, after trading between RMB2,525/tonne and RMB2,552/tonne.

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly lower Wednesday as the market remained on a downtrend amid bearish fundamentals. The benchmark November contract ended at MYR1,527 a metric tonne, down MYR11 from Tuesday.