November 15, 2006

 

CBOT Soy Outlook on Wednesday: Up 2-3 cents on follow-through momentum

 

 

Soybean futures on the Chicago Board of Trade are seen starting Wednesday's day session higher, in line with overnight price action amid follow-through momentum from Tuesday.

 

Soybean futures are called to open 2 to 3 cents higher.

 

In e-CBOT trade, January soybeans were 3 cents higher at US$6.74 1/4 and March was 1 3/4-cent higher at US$6.86 1/4 per bushel.

 

Underlying bullish sentiment continues to fuel upside price strength, with the speculative sector continuing to drive the market based on perceptions that futures remain undervalued in relation to corn, analysts said.

 

With little fresh news to stimulate price direction, traders will keep an eye on outside influences, with expected price strength in soyoil aiding the supportive tonnee as well, traders added.

 

Soyoil futures set new contract highs overnight and are called to start day-session trade 10 to 20 points higher. The markets are seen garnering price support from 2 1/2 year highs in Malaysian palm oil futures, as well as long-range demand prospects, analysts said.

 

A technical analyst said Tuesday's price strength and the close near the session high in January soybeans generated strong upside momentum. The next upside price objective is to close prices above solid chart resistance at the contract high of US$6.82 1/2 a bushel. The next downside price objective is closing prices below solid support at US$6.50.

 

First resistance for January soybeans is seen at Tuesday's high of US$6.74 and then at US$6.82 1/2. First support is seen at US$6.65 and then at US$6.60.

 

In demand news, Taiwan's Breakfast Soybean Procurement Association, or BSPA, Wednesday rejected all the bids in its tender for as much as 60,000 tonnes of U.S.- or South America-origin soybeans, an association official said.

 

The DTN Meteorlogix Weather Service forecast said hot, dry weather in Brazil during the next two days will give way to thunderstorms in the south by Friday. However, it may still be fairly hot and dry in Parana on Friday. The northern belt looks drier and hotter for at least the next five to seven days. In Argentina, conditions will turn cooler with scattered thunderstorms Wednesday. The heaviest of this activity may be in northern areas.

 

In deliveries, a total of 719 delivery notices recirculated against the November soybean future. Issuers and stoppers were scattered among various commission houses, with the house account at Term Commodities a featured issuer of 282 notices. The last trade date assigned was Nov. 14.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Wednesday. Spot cash soybean bids were up 1 cent in Keokuk, Iowa; down 5 cents in Quincy, Ill.; and down 3 cents in St. Louis, according to cash sources Wednesday.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled up Wednesday, largely tracking Tuesday's gains in CBOT soybean futures. The May 2006 soybean contract settled up RMB28 at RMB2,683 a metric tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply higher Wednesday, with heavy speculative buying and short covering lifting the market to a 2 1/2 year high. The January contract ended up MYR52 at MYR1,741 a metric tonne, after touching a high of MYR1,764/tonne. This was the benchmark contract's highest closing level since May 2004, traders said.