September 19, 2007

 

CBOT Soy Outlook on Wednesday: Down 2-4 cents; e-CBOT, lacks fresh bullish news

 

 

Chicago Board of Trade soybean futures are seen starting Wednesday's day session on the defensive, following the overnight theme as the market consolidates in the absence of fresh supportive news.

 

CBOT soybean futures are called to start the session 2 to 4 cents lower.

 

In overnight e-CBOT trading, November soybeans were 3 3/4 cents lower at US$9.65 3/4, and January soybeans were 1 1/2 cent lower at US$9.83.

 

The absence of aggressive fund buying that buoyed futures to new highs previously is opening the door for traders to book some profits, analysts said.

 

Light pressure is seen from a pickup in harvest activity, with producer hedging in deferred months after prices spiked to 3 year highs seen adding to the lower tone as well, analysts added.

 

However, bullish long range fundamental outlooks, with tightening inventories and strong demand serve as supportive influences to limit downside risks, traders said.

 

The market continues to search for a price level that will attract increased global acreage, and with dryness delaying the start of plantings in central and northern Brazil, analysts look for the market to maintain some risk premium in the near term.

 

A technical analyst said if the November contract extends last week's rally above resistance marked by July's high crossing at US$9.49 1/2, the 87% retracement level of the 2004-2005 decline crossing at US$9.93 is the next upside target. The high-range close sets the stage for a steady to higher opening on Wednesday. Stochastics and the RSI are overbought but are neutral to bullish, signaling that sideways to higher prices are possible. Closes below the 10-day moving average crossing at US$9.31 would signal that a short-term top has been posted, he added.

 

The DTN Meteorlogix Weather Service forecast said any significant rainfall during the next 7-10 days in Brazil will be confined to Rio Grande do Sul and southern Parana. Hot dry weather will continue over central Brazil. There is no sign of any rainfall developing in northern Mato Grosso during the next 10-15 days. Any early planting of soybeans in the northern Mato Grosso during the latter half of September will not take place this year with current indications that the dryness will persist at least into early October, Meteorlogix forecasts.

 

Meanwhile, in the U.S. Midwest, despite some rain over northern and western portions of the western corn belt during the past 24 hours, generally favorable weather for maturing and harvesting soybeans is expected during the next 5-7 days, Meteorlogix reports.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Wednesday on profit-taking, following strong gains in the past two sessions. The benchmark May 2008 soybean contract fell RMB45 to settle at RMB4,109 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Wednesday on weakness on e-CBOT and selling pressure, as traders took profits, market participants said. The benchmark December contract on Bursa Malaysia Derivatives ended MYR38 lower at MYR2,571/tonne after falling to an intraday low of MYR2,553/tonne.