October 24, 2007

 

CBOT Soy Outlook on Wednesday: Down 3-5 cents; grain, outside market influences

 

 

Chicago Board of Trade soybean futures are poised for a lower start, taking its cue from overnight price action, with the defensive influences of outside inflationary markets applying pressure.

 

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

 

In overnight e-CBOT trading, November soybeans were 4 3/4 cents lower at US$9.77 per bushel, and January soybeans were 4 3/4 cents lower at US$9.94 1/2.

 

Spillover weakness from metals, crude oil and grain futures, with the influence of a firmer U.S. dollar early Wednesday, is setting up for a lower theme, analysts said.

 

Nevertheless, the market remains trapped inside its recent trading range, as prices continue to hover in a sideways pattern amid the absence of fresh fundamental news, analysts add.

 

A quiet news front is keeping traders attention on outside markets, with end user buying and strong global demand underpinning prices, while a lack of fresh bullish inputs, favorable U.S. harvest weather and improved planting conditions in Brazil keeping a lid on upside movement, traders said.

 

A technical analyst said market bulls still have the near-term technical advantage, but trading has turned choppy. The next upside price objective for January soybeans is to push and close prices above solid technical resistance at last week's high of US$10.15. The next downside price objective is closing prices below solid support at this week's low of US$9.80.

 

First resistance for January soybeans is seen at Tuesday's high of US$10.05 1/2 and then at US$10.11. First support is seen at Tuesday's low of US$9.94 and then at US$9.90.

 

The DTN Meteorlogix Weather Service forecast said mainly dry conditions are on tap for Wednesday and Thursday in the western U.S. Midwest. A chance for a few light showers, favoring eastern areas is on tap for Friday. Temperatures will average near to above normal north, near to below normal south. In the eastern Midwest, showers linger in the southeast and far eastern areas Wednesday. Drier conditions are in store for Thursday, with a chance for a few light showers Friday. Temperatures will average near to below normal Wednesday, near to above normal Thursday, and above normal Friday.

 

In Brazil, widespread rainfall for Mato Grosso, Mato Grosso Do Sul and southern Goias will help improve soil moisture for early soybeans. The new soybean areas of western Bahia will continue drier and much warmer than normal during the next week or more, Meteorlogix reports.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly higher Wednesday as funds snapped up contracts on a favorable global outlook. The benchmark May 2008 soybean contract settled RMB31 higher at RMB4,318 a metric tonne, a new record high.

 

China's Inner Mongolia region will increase its grain and soybean output through expanding acreage and improving unit yields over the next few years, the Zhengzhou Grain Wholesale Market said Wednesday. The autonomous region will increase its annual soybean output in Daxinganling region to 1.5 million metric tonnes by 2010. Inner Mongolia is one of China's major soybean producing regions, with soybean output accounting for 8% of the country's total.

 

Crude palm oil futures on Malaysia's derivatives exchange ended slightly higher Wednesday amid thin trade, tracking a rise in soyoil prices, market participants said. The benchmark January CPO contract on Bursa Malaysia Derivatives ended MYR9 higher at MYR2,713 a metric.