December 23, 2009

 

CBOT Soy Outlook on Wednesday: Seen up; following overnight theme

 

 

Soybean futures on the Chicago Board of Trade are seen starting Wednesday's day session higher, following the overnight trend.

 

CBOT soybean futures are seen starting 4 to 6 cents higher. In overnight trade, January soybeans were 4 3/4 cents higher at US$9.95 3/4, and March soybeans were 5 cents higher at US$10.03 1/2.

 

A weaker U.S. dollar and firmer crude oil futures are expected to attract light speculative buying, with price consolidation following a four day string of downward moves opening the door for higher prices, analysts said.

 

However, a lack of fresh supportive fundamental news limits upside potential, and traders remain cautious of pushing prices after recent upward moves have attracted selling pressure, analysts said.

 

Traders expect participants will take the opportunity to square some positions in the last full trading day of the week. Meanwhile, mild pressure is anticipated from bearish stocks data for the soy products while crushings were in line with expectations for soybeans.

 

Improved crop weather in South America is another feature seen weighing on prices. Activity could become very erratic for the remainer of the year, with traders expecting choppy and two-sided trade.

 

A technical analyst said first resistance for March soybeans is seen at US$10.00 and then at Tuesday's high of US$10.18. First support is seen at Tuesday's low of US$9.92 1/4 and then at US$9.85.

 

The DTN Meteorlogix weather forecast said Brazil's major crop areas will see increasing coverage of showers and thunderstorms during the next 3-5 days, maintaining favorable conditions for crops. In Argentina, periodic scattered shower and thundershower activity will maintain favorable growing conditions for most summer crops.

 

U.S. soybean crushings totaled 168.607 million bushels in November, according to data from the U.S. Census Bureau Wednesday. On average, analysts anticipated a 168.4 million-bushel crush, according to a Dow Jones Newswires survey. Strong soy product demand that propelled daily crush rates were the fundamental drivers of the jump in crushing volume, analysts said. Meanwhile, soymeal stocks were pegged at 633,706 tonnes well above the average trade estimate of 428,800 tonnes. Soyoil stocks were reported at 3.156 billion pounds, above the average analyst estimate of 2.848 billion.

 

CBOT markets will have a holiday shortened trading week, with markets closing at 1 p.m. EST Thursday, and remaining closed Friday in observance of the Christmas Day holiday.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Wednesday, after Chicago Board of Trade counterparts fell below the US$10-a-bushel support level overnight. The benchmark September 2010 soybean contract settled RMB22, or 0.6%, lower at RMB3,929 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Wednesday, continuing a downward trend as investors liquidated positions, taking cues from a stronger dollar. The March contract on the Bursa Malaysia Derivatives settled MYR15, lower at MYR2,500 a metric tonne.