December 27, 2006

 

CBOT Soy Outlook on Wednesday: Steady-up 2 cents on e-CBOT, tech strength

 

 

Chicago Board of Trade soybean futures are expected to start Wednesday's session steady to higher, feeding off slightly higher overnight prices, with positive technical momentum featured, analysts said.

 

Soybean futures are called to open steady to 2 cents higher.

 

In e-CBOT trade, January soybeans were 1-cent higher at US$6.72 1/2 and March was 1-cent higher at US$6.87 1/2 per bushel.

 

The market is poised to edge higher based off overnight activity, but any signs of upside exhaustion could quickly uncover profit taking pressure, a CBOT floor analyst said.

 

The market is technically strong following Tuesday's price spike, but with ample nearby supplies and expected weakness in neighboring grain futures, soybeans will have a tough time sustaining advances without speculative fund buying support, he added.

 

Technicals will once again be highlighted in the absence of fresh fundamental news, with bearish weather conditions in South America and light declines in Asian markets serving as anchors on prices, traders added.

 

A market technician said key upside resistance lies at US$6.75 3/4, the Dec. 1 low and the top of an old gap basis January futures. The bulls need to penetrate that resistance to continue the rally near term. Beyond that ceiling lies major resistance at 6.91. On the downside, gap top support lies at 6.65 and gap bottom support is seen at US$6.60.

 

The DTN Meteorlogix weather forecast said a few thundershowers are on tap for southern Argentina during the next 3-5 days before moving northward. Some hot weather is expected during this period but there are no significant concerns for crops at this time.

 

In Brazil, southern soybean areas have benefited from recent rain activity and less hot weather. There is expected to be a period of hotter and drier weather during the next few days but this shouldn't last long enough to cause any significant concern, Meteorlogix forecasts.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Wednesday. Spot cash soybean bids were up 4 1/2 cents in Peoria, Ill., and down 15 cents at St. Louis, according to cash sources Wednesday.

 

Rotterdam soybeans and soymeal were higher. European vegoils were higher.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly lower Wednesday, pressured by profit-taking, analysts said. The benchmark May 2007 contract settled RMB4 higher at RMB2,901 a metric tonne, after trading between RMB2,890/tonne and RMB2,920/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly lower after a volatile trading day Wednesday, as the market again attempted, but failed, to end above the psychologically-important MYR2,000-a-metric-tonne level, analysts said. The benchmark March contract ended at MYR1,989 a metric tonne, down MYR6 from Tuesday.