November 25, 2009

 

CBOT Soy Outlook on Wednesday: Up 6-8 cents on strong demand, outside support

 

 

A strong fundamental base and supportive outside market influences have Chicago Board of Trade soybean futures poised for a higher start in Wednesday's day session.

 

CBOT soybean futures are seen starting 6 to 8 cents higher. In overnight trade, January soybeans were 8 1/2 cents higher at US$10.54 1/2, and March soybeans were 8 3/4 cents higher at US$10.60 3/4.

 

Weakness in the dollar and firmer crude-oil and metal futures are providing outside support to attract speculative buying, but good underlying demand remains the featured attraction underpinning soybeans, said Victor Lespinasse, analyst with Grainanayst.com.

 

Soybeans have strong demand fundamentals, and that will continue to support prices, he added.

 

Historical tendencies show that soybeans have ended higher 75% of the time over the last 30 years on the day before Thanksgiving, and this may promote optimism as well, traders said.

 

However, choppy activity is expected over the course of the day, as preholiday position evening and strong overhead chart resistance open the door for profit-taking.

 

A technical analyst said first resistance for January soybeans is seen at last week's high of US$10.50 and then at US$10.68. First support is seen at US$10.38 and then at Tuesday's low of US$10.32.

 

Meanwhile, higher-than-expected October soymeal stocks and lower-than-expected soyoil stocks may promote the unwinding of meal/oil spreads.

 

U.S. soybean crushings totaled 163.063 million bushels in October, according to data from the U.S. Census Bureau Wednesday. On average, analysts anticipated a 163.7 million-bushel crush, according to a Dow Jones Newswires survey. The availability of new crop soybean supplies in October, strong crushing margins and a strong cash premium for soymeal were the fundamental drivers of the jump in crushing volume, analysts said.

 

Soymeal stocks for October totaled 444,940 short tonnes, compared with the average estimate of 349,000. Soyoil stocks totaled 2.727 billion pounds. Analysts, on average, expected 2.796 billion pounds.

 

CBOT markets will be closed Thursday for Thanksgiving. The market will reopen with Thursday night's overnight session and trade an abbreviated day session Friday. The market will close at 1 p.m. EST Friday.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday, led by the gains in soyoil counterparts. The benchmark September 2010 soybean contract settled 0.4% higher at RMB3,886 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher Wednesday on speculative buying as investors took leads from higher export estimates and a rebound in crude oil prices. The February contract settled MYR4 higher at MYR2,482/tonne.