December 28, 2006

 

CBOT Soy Outlook on Thursday: Up 6-8 cents, following e-CBOT trend

 

 

Chicago Board of Trade soybean futures are expected to start Thursday's day session on firm footing, taking its cue from overnight trade with technical activity seen as a featured attraction.

 

Soybean futures are called to open 6 to 8 cents higher.

 

In e-CBOT trade, January soybeans were 8 3/4 cents higher at US$6.78 1/4 and March was 8 cents higher at US$6.93 1/4 per bushel.

 

A quiet news front is seen keeping technical factors a dominant influence on prices, with overnight gains in Malaysian palm oil futures expected to lend support to prices in early trade, analysts said.

 

Despite Wednesday's weaker close, a bullish upside breakout remains intact, though major upside progress could be difficult amid thin holiday trading conditions, a technical analyst 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 market needs to penetrate that resistance to continue the rally near term. Beyond that ceiling lies major resistance at US$6.91. On the downside, gap top support lies at US$6.65 and gap bottom support is seen at US$6.60, the analyst adds.

 

Otherwise, spreads are expected to be a feature as traders square up positions ahead of Friday's first notice day for January futures. Nevertheless, traders remain leery of exaggerated price moves that can occur in thin holiday markets, as traders look to limit risks in the last full trading session of the year, analysts said.

 

CBOT grain and oilseed markets close at 12:00 p.m. CST Friday and will be closed Monday in observance of the New Years day holiday.

 

The DTN Meteorlogix weather forecast said any shower activity during the next 5-6 days in Argentina's crop belt will be light and with low coverage. Temperatures at above normal levels are seen reducing soil moisture, but cooler temperatures and mostly light showers are on tap after this period.

 

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 five days, but this shouldn't last long enough to cause any significant concern, Meteorlogix reports.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Thursday. Spot cash soybean bids were up 1-cent in Keokuk, Iowa, down 3 cents in central Illinois, and up 15 cents at St. Louis, according to cash sources Thursday.

 

Rotterdam soybeans were steady to lower and soymeal were mixed. European vegoils were flat to higher.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly higher Thursday, supported by stronger soymeal futures, analysts said. However, the benchmark May 2007 contract settled RMB1 lower at RMB2,900 a metric tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives rallied Thursday to end at a near eight-year high, boosted by gains in soyoil futures and renewed concerns about floods disrupting supply, analysts said. The March contract ended MYR43 higher at MYR2,032 a metric tonne.