November 1, 2006

 

CBOT Soy Outlook on Wednesday: Up 1-2 cents; in tune with overnight theme

 

 

Traders at the Chicago Board of Trade are anticipating a higher start to Wednesday's day-session activity in soybean futures, as higher overnight indicators are pointing toward prices bouncing back from Tuesday's declines.

 

Soybean futures are called to open 1 to 2 cents higher.

 

In e-CBOT trade, November soybeans were 2 1/4 cents higher at US$6.32 1/2 and January was 1/2-cent higher at US$6.44 3/4 per bushel.

 

The market is poised to rebound from Tuesday's end-of-month profit-taking setback, with strength in outside markets and a general perception that soybeans remain under-priced in relation to corn and wheat underpinning prices, analysts said.

 

A quiet news front will continue to keep attention focused on technical factors, with traders eyeing activity in corn and wheat for a feel on speculative fund intentions, traders said. Analysts are also paying close attention to demand to see whether the counter-seasonal October rally will lead to a dropoff in export sales following a strong commitment pace to start to the 2006-07 marketing year.

 

For the month of October, November soybeans rallied 82 3/4 cents and January soybeans were up 82 cents.

 

A market technician said Tuesday's close near the session low in January soybeans provided no serious chart damage, with market bulls still possessing a solid technical advantage. The next upside price objective is to close prices above solid chart resistance at the contract high of US$6.56. The next downside price objective is closing prices below solid support at US$6.25.

 

First resistance for January soybeans is seen at Tuesday's high of US$6.50 and then at US$6.56. First support is seen at US$6.40 and then at US$6.35.

 

The DTN Meteorlogix weather forecast says cold conditions leading to a hard freeze in all locations will firm U.S. Midwest soils and allow for better harvest conditions for the end of this week into the weekend. Next week harvest conditions may again become unfavorable as temperatures turn warmer and rain chances increase.

 

In South America, shower activity will maintain soil moisture for early development of corn and soybeans in Argentina. Meanwhile, most soybean and corn areas in Brazil will see moderate to heavy shower activity during a five-day period. This should maintain soil moisture for early crop development while causing some delay to the planting effort, Meteorlogix reports.

 

In deliveries, a total of 2,013 delivery notices were posted against the November soybean future. The house account at Term Commodities issued 427 lots with a customer account at Tenco issuing 564 lots. The house account at ADM Investor Services was the primary stopper of 1,347 lots. The last trade date assigned was Oct. 26.

 

In news, Brazil's National Commodities Supply Corp, or Conab, will auction 1 million metric tonnes of soybeans from the new 2006-07 crop on Nov. 10, the local Estado newswire reported. Agriculture Minister Luis Guedes Pinto said the government will make 1 billion Brazilian reals - US$467 million - in soy subsidies on Wednesday, the newswire reported.

 

South Korea's Nonghyup Feed Inc. bought 55,000 tonnes of India or South American origin soymeal for May delivery in a tender concluded late Tuesday.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Wednesday pressured by Tuesday's CBOT losses, analysts said. The most-active May 2007 contract fell RMB21 to settle at RMB2,784 a metric tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Wednesday after choppy trade, with short covering and speculative buying helping the market rebound from the previous day's losses. The benchmark January CPO contract ended up MYR19 at MYR1,680 a metric tonne.