September 26, 2007

 

CBOT Soy Outlook on Wednesday: Up 3-5 cents on e-CBOT, fundamental strength

 

 

Soybean futures on the Chicago Board of Trade are poised for a higher start to Wednesday's day session, taking their cue from the overnight theme, as bullish underlying fundamentals absorb seasonal weakness, analysts said.

 

CBOT soybean futures are called to start the session 3 to 5 cents higher.

 

In overnight e-CBOT trading, November soybeans were 3 1/2 cents higher at US$9.76 1/2, and January soybeans were 3 cents higher at US$9.92.

 

The long term bullish outlook for soybeans and lingering uncertainty surrounding yields continue to provide price support despite advancing harvest progress as farmers shift their attention to soybean combining from corn, analysts said.

 

The market is also garnering support from heat and drought in central and northern Brazil, which is threatening early planting operations, analysts said.

 

Strong demand prospects and the need to secure additional global soybean acreage for 2008 remains an underpinning theme to keep prices well supported, a CBOT floor analyst said.

 

However, overbought market conditions following a nearly US$2.00-per-bushel rise in prices from the August lows and harvest-related pressures are expected to apply mild pressure to promote further price consolidation in the near term, he said.

 

A technical analyst said no chart damage has occurred on recent setbacks, but the bulls are fading a bit. Soybean prices are still in a steep uptrend from the August low, with no strong technical signs of a market top being in place. The next upside price objective for November soybeans is to push and close prices above major psychological resistance at US$10.00 a bushel. The next downside price objective is closing prices below support at last week's low of US$9.53.

 

First resistance for November soybeans is seen at Tuesday's high of US$9.82 1/2 and then at this week's high of US$9.85 1/2. First support is seen at Tuesday's low of US$9.70 1/4 and then at US$9.60.

 

Meanwhile, Asian soybean rust was confirmed on a soybean leaflet from a soybean field located in Massac County in southern Illinois on Tuesday, University of Illinois extension plant pathologist Carl Bradley said Wednesday, via the U.S. Department of Agriculture's public rust Web site.

 

"The (developmental) stage of the soybean crop at this point in time is past the stage in which soybean rust can cause economic yield loss," Bradley said.

 

The DTN Meteorlogix Weather Service forecast said showers early this week may cause delays to the harvest activities in the U.S. Midwest but nothing major is expected.

 

In Brazil, any significant rainfall during the next 7-10 days 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 significant rainfall developing in northern Mato Grosso until the latter part of the first week of October, Meteorlogix forecasts.

 

The USDA is scheduled to release its quarterly grain stocks report Friday at 8:30 a.m. EDT. The average of analysts' estimates surveyed by Dow Jones Newswires pegs U.S. soybean supplies as of Sept. 1 at 552 million bushels. The estimates ranged from 543 million to 558 million bushels.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday, as China's soybean imports are expected to rise on strong demand in the fourth quarter despite rising import costs. The benchmark May 2008 soybean contract settled RMB59 higher at RMB4,130 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Wednesday after volatile late afternoon trading, shedding most of the gains they made Monday, market participants said. The benchmark December contract at the Bursa Malaysia Derivatives ended MYR43 lower at MYR2,612 a metric tonne.