November 27, 2007

 

CBOT Soy Outlook on Tuesday: Down 4-6 cents; outside markets; quiet news front

 

 

Chicago Board of Trade soybean futures are poised for a lower start to Tuesday's day session, pressured by a lack of fresh news and spillover weakness from outside markets, analysts said.

 

CBOT soybean futures are called to start the session 4 to 6 cents lower.

 

In overnight e-CBOT trading, January soybeans were 6 3/4 cents lower at US$10.97 per bushel, and March soybeans were 6 1/2 cents lower at US$11.14 1/2.

 

A quiet news front, with pressure from outside markets have soybeans poised for some early price retrenchment, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The market also fears a possible slow down in China buying after saturating the marketplace with heavy buys in recent weeks, said Roose.

 

Otherwise, the market has little fresh fundamental news to derive direction, with the influence of outside inflationary markets expected to impact price movement, analysts added.

 

Meanwhile, the U.S. Department of Agriculture announced Tuesday private export sales of 120,000 metric tonnes of soybeans for delivery to China in the 2007-08 marketing year.

 

A technical analyst said the next upside price objective for January soybeans is to push and close prices above solid resistance at US$11.50 a bushel. The next downside price objective is closing prices below strong support at US$10.86 1/2, which is the bottom of an upside price gap on the daily bar chart.

 

First resistance for January soybeans is seen at Monday's contract high of US$11.09 1/2 and then at US$11.25. First support is seen at Monday's low of US$10.92 and then at US$10.86 1/2.

 

The DTN Meteorlogix Weather Service said warmer, drier weather will favor the planting effort and early growth of soybeans in Brazil during the next 5-7 days. However, long range charts suggest a return to wetter weather.

 

Commodity Futures Trading Commission on Monday reported in its supplemental commitment of traders report that index funds held net long positions totaling 179,065 combined CBOT soybean futures and options contracts as of Nov 20, up from 174,096 the prior week. Traditional large speculative traders were net long 134,912 contracts compared with net longs of 131,013 in the previous week. Commercials held net short combined futures and options positions totaling 272,512 contracts, up from the previous week's 266,395 contracts.

 

In other news, China's soybean imports may grow faster in 2007 compared with last calendar year, an analyst with commodities analysis firm Shanghai JCI said Tuesday. The analyst said China's soybean imports in 2007 may rise to 31 million metric tonnes, up 9.6% on year. In 2006, China's soybean imports rose 6.3% on year.

 

Brazil should harvest 62.4 million metric tonnes of soybeans in 2007-08, farm consultancy AgRural said Tuesday, lowering its volume estimate from a previous call of 62.8 million tonnes. Brazil's leading soy producer, Mato Grosso, should plant 5.6 million hectares, down 2.3% from AgRural's October estimate. AgRural cited a late start to the planting season as the principal culprit.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Tuesday as traders took profits due to a lack of supportive news. The benchmark September 2008 soybean contract settled RMB59 lower at 4,429 a metric tonne.

 

Crude palm oil futures traded on Malaysia's derivatives exchange ended lower Tuesday, after late-afternoon selling pressure wiped out the last two trading day's gains, said trade participants. The benchmark February contract on Bursa Malaysia Derivatives ended MYR53 lower at MYR2,985/tonne.