October 17, 2006

 

CBOT Soy Outlook on Tuesday: Up 5-7 cents; e-CBOT, technicals, spillover

 

 

Soybean futures on the Chicago Board of Trade are set to start Tuesday's session on firm footing, in tune with overnight price strength and technical momentum.

 

Soybean futures are called to open 5 to 7 cents higher.

 

In e-CBOT trade, November soybeans were 7 cents higher at US$5.96 and January was 61/2 cents higher at US$6.10 per bushel.

 

The market is poised open higher, benefiting from a positive technical aspect, with spillover strength from outside markets and good underlying demand supporting prices, a CBOT commission house broker said.

 

The bullish wave continues, as the market continues to propel away from harvest lows, with talk of good domestic and export demand managing to absorb seasonal harvest pressure fairly well, analysts added.

 

Meanwhile, a technical analyst said last week's high of US$5.94 1/2 basis November futures is strong overhead technical resistance. The next downside price objective is closing prices below solid support at US$5.70.

 

First resistance for November soybeans is seen at Monday's high of US$5.93 1/2 and then at US$5.94 1/2. First support is seen at Monday's low of US$5.86 1/2 and then at US$5.80.

 

The DTN Meteorlogix weather forecast says wet weather in the U.S. Midwest may cause further harvest delays this week, but mostly for the southern and eastern locations. In the western belt, there is a chance for light to locally moderate precipitation through Wednesday, with drier conditions on tap for Thursday. Temperatures will average near to below normal Tuesday, below to well below normal Wednesday and Thursday.

 

In the eastern Midwest, light rain will linger through northern and eastern areas of the region early Tuesday. Light or locally moderate showers redevelop in the west and spread east Wednesday, before clearing Thursday. Temperatures will average near to above normal Tuesday and Wednesday, and below normal Thursday, Meteorlogix reports.

 

U.S. Department of Agriculture reported Monday that 69% of the 2006 U.S. soybean crop was harvested as of October 15. The harvest pace is ahead of the five-year average of 65%. Analysts anticipated a harvested figure between 60% and 66%.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Tuesday amid bullish sentiment. The benchmark January 2007 contract gained RMB9 to settle at RMB2,581 a metric tonne, after trading between RMB2,569/tonne and RMB2,598/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly higher Tuesday on stronger crude oil prices, but failed yet again to regain a major psychological level. The benchmark January CPO contract ended up MYR8 at MYR1,598 a metric tonne.