November 8, 2006

 

CBOT Soy Outlook on Wednesday: Up 6-8 cents following overnight, corn strength

 

 

Soybean futures on the Chicago Board of Trade are poised for a firm opening Wednesday, influenced by overnight indicators with spillover strength from corn seen leading prices to the upside.

 

Soybean futures are called to open 6 to 8 cents higher.

 

In e-CBOT trade, November soybeans were 1/4-cent higher at US$6.55 and January was 8 1/4 cents higher at US$6.75 1/2 per bushel.

 

The absence of any significant fresh fundamental news continues to keep prices following the lead of corn, as speculative buyers remain comfortable pushing futures in tandem with corn, analysts said.

 

A general lack of selling pressure is aiding the market's strength, as traders remain leery of pressing prices amid speculative fund's willingness to buy weakness in the market, analysts added.

 

Nevertheless, overbought market conditions and outlooks for bearish supply forecasts in Thursday's crop report are seen as bearish features that could ignite consolidation pressure, traders said.

 

A technical analyst said the next upside price objective for the market is to close prices above solid chart resistance at January's contract high -US$6.82. The next downside price objective is closing prices below solid support at US$6.35.

 

First resistance for January soybeans is seen at Tuesday's high of US$6.71 1/4 and then at US$6.75. First support is seen at Tuesday's low of US$6.58 1/2 and then at US$6.55.

 

The average of analysts' estimates taken from a survey compiled by Dow Jones Newswires for 2006-07 U.S. soybean production based on conditions as of Nov. 1 pegs the crop at 3.240 billion bushels. The estimates ranged from 3.193 billion bushels to 3.316 billion bushels. The average of estimates pegged 2006-07 ending stocks at 583 million bushels. The estimates ranged from 520 million to 635 million bushels.

 

The DTN Meteorlogix weather forecast said wet conditions will continue to delay crop harvests for Michigan, Indiana and Ohio. In Brazil, recent rainfall will maintain favorable soil moisture for early developing soybeans while periodic dryness favors continued planting activities.

 

In Argentina, dry and warm to hot weather is on tap for the next 5 to 7 days. Wednesday's long range charts suggest a chance for increasing rain 8 to 10 days out, however this is a long range outlook and subject to significant day to day changes, Meteorlogix reports.

 

In news, Brazil's Census Bureau, IBGE, said Wednesday that the 2006-07 soy planted area will be 7% less than the previous season's crop, or 20.5 million hectares. The number is similar to estimates made by the National Commodities Supply Corp, or Conab, and private consulting firms like AgRural and Agroconsult. IBGE put early crop yield estimates at 2,695 kilograms per hectare, 13.3% greater than the 2005-06 crop.

 

China's soybean imports rose 9.7% on year in the January-October period to 23.5 million metric tonnes, the General Administration of Customs said Wednesday. In October alone, China's soybean imports were 2.25 million tonnes, according to Chinese Customs.

 

In deliveries, a total of 1,352 delivery notices recirculated against the November soybean future. Issuers and stoppers were widely scattered among various commission houses. The last trade date assigned was Nov. 7.

 

Rotterdam soybeans were higher and soymeal were mixed. European vegoils were mixed.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly higher, supported by gains in CBOT soybean futures Tuesday, analysts said. The most active May 2007 contract settled RMB8 higher at RMB2,834 a metric tonne, after trading between RMB2,828/tonne and RMB2,840/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives finished slightly down in range bound, choppy trade Wednesday on a lack of fundamentals. The benchmark January contract ended down MYR6 at MYR1,674 a metric tonne.