December 26, 2007

 

CBOT Soy Outlook on Wednesday: Firmer start seen following Asian trade

 

 

Strength in Asian trading and generally bullish momentum are expected to lift soy complex futures at the Chicago Board of Trade Wednesday.

 

Most-active March soybean futures are called to open 5-to-9 cents a bushel higher. Electronic trade was shuttered for the Christmas holiday Tuesday and will resume when pit trade does, at 10:30 a.m. EST.

 

Absent other fresh news, soybeans are seen taking the baton from gains in Chinese and Malaysian markets, both which ended firmer overnight.

 

"Palm oil prices closed sharply higher - at all-time highs and China's soy prices are closed firmer, so that's something (supportive) for soybeans," said Don Roose, president, U.S. commodities.

 

September soybean futures at the Dalian Commodity Exchange rose RMB117 at 4,624 a metric tonne Wednesday on surging vegetable oil prices. Crude palm oil futures on Malaysia's derivatives exchange ended at record highs Wednesday on steady exports, expectations of lower output due to bad weather and strong strong crude oil futures. March palm oil at the Bursa Malaysia Derivatives ended MYR50 higher at MYR3,080 a metric tonne after reaching an intraday high of MYR3,087/tonne.

 

CBOT soybeans have been trading at multi-decade highs themselves, supported by strong demand and dwindling U.S. stocks. "Soybeans will be the leader until we see a slowdown in demand," Roose said.

 

There were some showers in both Argentina and Brazil over the past few days and some rain is expected over the next day or two, according to DTN Meteorlogix. The private weather firm said long range charts for Argentina suggest warmer, drier weather to return to the central agricultural belt next week. That dryness is supportive for prices as soybean crops are developing in the Latin American nations at this time.

 

A technical analyst said the dominant technical uptrend remains strong for soybeans and the bulls are within striking distance of the historic all-time high at US$12.90 a bushel, hit in 1973. A settlement above US$12 will set the market up for a test of the all-time high.

 

However, the analyst cautions that "bullish traders may want to use caution and be aware of that potential bearish divergence at psychological resistance at the US$12 ceiling, especially amid thin holiday market action," he said.

 

First resistance for March soybeans is seen at Monday's contract high of US$12, with a major target at US$12.90. First support is seen at US$11.83 and then at US$11.65.