November 28, 2007

 

CBOT Soy Outlook on Wednesday: Down 4-6 cents; e-CBOT theme, dollar strength

 

 

Chicago Board of Trade soybean futures are expected to start Wednesday's day session lower, in tune with overnight trade, garnering pressure from a firmer U.S. dollar.

 

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

 

In overnight e-CBOT trading, January soybeans were 5 1/2 cents lower at US$10.85 1/2 per bushel, and March soybeans were 7 3/4 cents lower at US$11.00.

 

The firmer U.S. dollar is seen applying pressure to prices, with higher metal futures raising inflationary concerns to attract speculative sellers, analysts said.

 

Overnight weakness in China soybean and Malaysian palm oil futures are expected lend pressure to prices as well, analysts added. Technical selling is seen adding to the losses, with the ability of nearby futures to breach nearby support levels overnight expected to generate some pressure, a CBOT floor analyst said.

 

However, the dollar's surge overnight failed to produce a significant break in crude oil, offering some hope that oilseed prices maybe able to stabilize after a soft opening this morning, said Arlan Suderman analyst with Farm Futures in a morning market report.

 

January crude oil futures are 60 cents higher at US$95.02 a barrel at 9:07 a.m. EST.

 

Solid underlying demand remains a supportive feature to limit losses, with traders viewing declines as minor setbacks in an overall bullish trend, a CBOT floor analyst added.

 

A technical analyst said bean bulls still have the solid near term technical advantage, amid still no solid technical clues that a market top is close at hand. The next upside price objective for January soybeans is to push and close prices above solid resistance at the contract high of US$11.09 1/2 a bushel. The next downside price objective is closing prices below strong support at US$10.70.

 

First resistance for January soybeans is seen at Tuesday's high of US$10.93 1/2 and then at US$11.00. First support is seen at Tuesday's low of US$10.82 1/2 and then at US$10.70.

 

The DTN Meteorlogix Weather Service said wet weather in Brazil's Bahia state and showers in Mato Grosso continue to improve the outlook for the early planted soybean crop. Drier weather in southern Brazil will favor planting and field work for another 5 days or so. After that rain may redevelop, Meteorlogix said.

 

In Argentina, drier and warmer to hotter weather during the next few days favors field work and planting while reducing soil moisture for developing crops. Scattered showers during the weekend and again early next week will help ease stress to early developing crops. However, it is unclear whether the very dry areas of Cordoba province will see good coverage with these showers, Meteorlogix said in the forecast.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Wednesday on weakening crude oil and gold prices. The benchmark September 2008 soybean contract settled RMB49 lower at 4,380 a metric tonne.

 

Crude palm oil futures traded on Malaysia's derivatives exchange ended lower for third straight day Wednesday on profit-taking and heavy selling by a major Singapore-based trading company in the cash market, trade participants said. The benchmark February contract on Bursa Malaysia Derivatives ended MYR52 lower at MYR2,933/tonne.