November 22, 2006
CBOT Soy Outlook on Wednesday: Seen up on e-CBOT strength, seasonal plays
Chicago Board of Trade soybean futures are expected to start Wednesday's day session on firm footing, in tune with overnight price action with seasonal buying an underlying theme.
Soybean futures are called to open 3 to 5 cents higher.
In e-CBOT trade, January soybeans were 5 1/4 cents higher at US$6.78 1/4 and March was 4 cents higher at US$6.90 1/4 per bushel.
The market is poised to follow overnight advances initially, as seasonal buys underpin as well as spillover support from soyoil amid its move to contract highs in overnight trade, analysts said.
The lack of fresh fundamental news to inspire activity will keep speculative interest in command. However, traders question the sustainability of price strength over the course of the day, particularly with world oilseed markets lower overnight. In addition, participants are expected to square positions ahead of Thursday's Thanksgiving Day holiday.
Nevertheless, underlying support from tightening world vegoils supplies, outlooks for a large shift in 2007 soy acres to corn and the uncertainty of South American crop potential remain underlying supportive themes, analysts added.
A technical analyst said market bulls are in technical command and looking for more on the upside. The next upside price objective is to close prices above solid chart resistance at the January future's 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 US$6.70 and then at this week's high of US$6.77. First support is seen at US$6.70 and then at Tuesday's low of US$6.66 3/4.
CBOT day session grain markets will close at 12:00 p.m. CST Wednesday and will be closed Thursday in observance of the Thanksgiving Day holiday.
U.S. Department of Agriculture said Wednesday private exporters reported the sale of 122,000 metric tonnes of U.S. soybeans to China for delivery in the 2006-07 marketing year.
The DTN Meteorlogix weather forecast said rain is expected to return to the southern growing belt of Brazil during the weekend and Monday. The rain is seen maintaining soil moisture for early growth but may cause field work and planting delays. In Argentina, showers and light rain is on tap for Friday or Saturday. The rainfall will maintain soil moisture summer crops, Meteorlogix forecasts.
Meanwhile, the Brazilian Census Bureau, or IBGE, said Wednesday, Brazil farmers lost 13.6 billion Brazilian reals (US$6.3 billion) in production value in 2005 compared to 2004, with 80% of the losses due to falling soybean prices at the time.
U.S. Midwest cash soybean basis bids are mostly unchanged Wednesday. Spot cash soybean bids were down 3 cents in Sioux City, Iowa, up 6 cents in Quincy, Ill., and up 2 cents in St. Louis, according to cash sources Wednesday.
Rotterdam soybeans were higher and soymeal was mixed. European vegoils were mixed.
In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Wednesday on a combination of fresh short positions and long liquidation, following strong gains in previous weeks. The benchmark May 2007 contract settled RMB32 lower at RMB2,919 a metric tonne.
Crude palm oil futures ended moderately lower on the Bursa Malaysia Derivatives Wednesday as some selling pressure began to emerge in a market still riding high on a wave of supportive technical factors, analysts said. The benchmark February contract closed MYR5 lower at MYR1,866 a metric tonne.
