December 26, 2006

 

CBOT Soy Outlook on Tuesday: Up 1-3 cents, tech carryover, Asian markets

 

 

Chicago Board of Trade soybean futures are poised to start Tuesday's session on firm footing, underpinned by carryover momentum from Friday and the supportive influence of higher Asian markets overnight, analysts said.

 

Soybean futures are called to open 1 to 3 cents higher.

 

The absence of overnight electronic trading coupled with a quiet news front will place emphasis on technical factors, with strength from Friday's firm close and the influence of strength in Asian markets setting the stage early Tuesday, a CBOT floor analyst said.

 

Nevertheless, traders anticipate volume to remain thin heading into the end of the year, with prices hovering within a range, as favorable weather conditions for South American crops serves as an anchor on upside potential.

 

A technical analyst said market bulls have gained some upside technical momentum heading into the last trading week of the year. The next upside price objective for January soybeans is to close prices above solid resistance at US$6.70 a bushel. The next downside price objective is closing prices below solid support at this week's low of US$6.43.

 

First resistance for January soybeans is seen at Friday's high of US$6.60 and then at US$6.65. First support is seen at US$6.55 and then at US$6.50.

 

The DTN Meteorlogix weather forecast said an upper level ridge is expected to form over Argentina before moving to southern Brazil later in the weekend. This will promote a period of hot weather but it is not expected to last more than 3 to 5 days before rain returns. In Brazil, thunderstorm activity helps recharge soil moisture for soybeans through the southern belt. An upper level ridge is expected to drift across southern Brazil during the weekend and early next week. It should be hotter during this period but long range charts suggest that this hot/dry period does not last long enough to threaten soybeans, Meteorlogix forecasts.

 

The Commodity Futures Trading Commission on Friday reported large speculative traders were net long 45,207 combined soybean futures and options contracts as of Dec. 19, compared with net longs of 51,188 in the previous week. Speculative funds were reported net long soyoil futures and options to the tune of 50,904 lots, compared with net longs of 62,192 lots in the prior week. Large speculative traders were reported net long combined futures and options positions in soymeal by 11,007 lots, compared with net longs of 16,258 contracts last week.

 

On tap for Tuesday, the U.S. Department of Agriculture is scheduled to release its weekly export inspection report 10:00 a.m. CST.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday, supported by speculative long buying, analysts said. The benchmark May 2007 contract settled RMB21 higher at RMB2,897 a metric tonne, after trading between RMB2,885/tonne and RMB2,912/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives rallied Tuesday in heavy trading, with a combination of bullish factors such as concerns about floods disrupting supply lifting the market to a 33-month high. The March contract ended at MYR1,995 a metric tonne, up MYR94 from Friday.