October 4, 2006

 

CBOT Soy Outlook on Wednesday: Steady to up 1 cent, following overnight tone

 

 

Soybean futures on the Chicago Board of Trade are expected to start Wednesday's day session steady to firmer, following the overnight tone, with wheat seen lending price support.

 

Soybean futures are called to open flat to 1 cent higher.

 

In e-CBOT trade, November soybeans were 1 cent higher at US$5.43 1/2 per bushel.

 

A quiet news front is expected to keep prices hovering in a sideways trend, with spillover strength from firm wheat prices and light concerns over harvest slow downs in the eastern Midwest generating prices strength, analysts said.

 

However, upside potential is expected to remain hindered by bearish production outlooks as talk of the potential for record output coupled with ample carryover old crop stocks are keeping a lid on price gains, traders added.

 

Meanwhile, news of China buying U.S. supplies is seen aiding soy prices, with early price support from crude oil futures expected to lend strength to soyoil prices after the December contract's fall to 6-month lows Tuesday.

 

The U.S. Department of Agriculture said private exporters reported the sale of 116,000 metric tonnes of U.S. soybeans to China for delivery in the 2006-07 marketing year.

 

A technical analyst said soybeans are the "weak sister" of the major grains. It will take a close above technical resistance at US$5.55 in November soybeans 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$5.45 and then at US$5.50. First support is seen at US$5.40 and then at US$5.37 1/2.

 

The DTN Meteorlogix weather forecast says wet weather will continue to delay harvest operations in the eastern Midwest this week and possibly next week, while harvest weather is much better in the western belt.

 

The forecast for the eastern belt calls for scattered showers and thunderstorms Wednesday and early Thursday. Drier conditions surface late Thursday, with mainly dry outlooks for Friday. Temperatures will average above or well above normal Wednesday and then near to below normal Thursday. In the western belt, a few thundershowers are expected early Wednesday in southeast Minnesota and in eastern Iowa, before mainly dry conditions return Wednesday afternoon, Thursday and Friday. Temperatures turn cooler Wednesday and Thursday, and warmer again during Friday, Meteorlogix forecasts.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Wednesday. Spot cash soybean bids were down 2 cents in Keokuk, Iowa, up 10 cents in Peoria, Ill., and up 1-cent in St. Louis, Mo., according to cash sources Wednesday.

 

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

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended lower Wednesday as the market continued to mirror the movement of crude oil prices. The benchmark December CPO contract ended at MYR1,522 a metric tonne, down MYR12 trading within a range of MYR1,510 to MYR1,525/tonne.