September 27, 2006

 

CBOT Soy Outlook on Wednesday: Steady to higher after overnight trade

 

 

Chicago Board of Trade soybean futures are seen starting Wednesday's day session steady to firmer, following the overnight price theme, with spillover support from neighboring grain futures lending support

 

In e-CBOT trade, November soybeans were 1/2 cent higher at US$5.47 1/4 per bushel. Soybean futures are called to open steady to 1 cent higher.

 

The market is poised for a steady to firm start amid overnight price indicators, with expected gains in wheat and corn providing some light support to prices, analysts said.

 

However, traders say upside movement will remain limited, as seasonal pressures associated with plentiful old crop supplies and talk of favorable yields cap upside potential. Bearish underlying fundamentals will make it tough to push prices firmly above technical resistance near the US$5.50 price level basis November as well, analysts added.

 

Nevertheless, the lack of cash movement, a chance for harvest delays later in the week and firm outside markets are seen as underpinning features to curtail aggressive selling, said a CBOT commission house broker.

 

A market technician said it will take a close above technical resistance at the September high of US$5.63 in November beans to provide some fresh upside technical momentum. The next downside price objective is closing prices below solid support at the contract low of US$5.37 1/2.

 

First resistance for November soybeans is seen at US$5.50 1/4 - Tuesday's high - and then at US$5.55. First support is seen at US$5.44 3/4 - Tuesday's low - and then at US$5.40.

 

In soymeal, the technician said the next downside price objective for December meal is closing prices below solid support at the contract low of US$158.50. For the market to regain fresh upside technical momentum, December futures will have to close above solid resistance at US$166.50. First resistance comes in at Tuesday's high of US$164.30 and then at US$166.50. First support is seen at Tuesday's low of US$162.60 and then at this week's low of US$161.80.

 

The DTN Meteorlogix weather forecast says harvest conditions should improve in the western and central Midwest, but rainfall in the eastern belt may keep harvest activity slow.

 

In the western Midwest, a chance for sprinkles or light showers is on tap for Wednesday, with mainly dry conditions expected Thursday and Friday. Temperatures will average below normal, with the lowest readings ranging from the 30s to the low 40s Fahrenheit. In the eastern belt, there is a chance for sprinkles and light showers Wednesday into Thursday. Moderate showers, 0.25 to 0.75 inch, are possible through southeast Illinois, southern and eastern Indiana and western Ohio. Temperatures will average near to above normal Wednesday, near to below normal Thursday, and below normal Friday, Meteorlogix forecasts.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Wednesday. Spot cash soybean bids were down 3 cents in Sioux City, Iowa, up 10 cents in Frankfort, Ind., and down 2 cents in St. Louis, Mo., according to cash sources Wednesday.

 

Rotterdam soybeans and soymeal were mostly higher. European vegoils were flat to lower.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower. The benchmark January 2007 contract settled RMB6 lower at RMB2,535 a metric tonne, after trading between RMB2,530/tonne and RMB2,541/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Wednesday. Traders say steady oil prices and optimism that the market may have reached a bottom supported prices. The benchmark December contract ended at MYR1,540 a metric tonne, up MYR19.