October 10, 2007
CBOT Soy Outlook on Wednesday: 15-17 cents higher on palm oil, acreage concerns
Chicago Board of Trade soybean futures are expected to begin day session trading Wednesday 15 to 17 cents higher as stronger palm oil futures overnight and acreage concerns are expected to support prices at the opening, analysts said.
In overnight e-CBOT trading, November soybeans rallied 17 3/4 cents to US$9.68 per bushel, and January gained 15 1/4 cents to US$9.84. E-CBOT volume in November was 5,531 contracts.
Soybeans rallied overnight on the strength in palm oil and acreage concerns, an analyst said. Talk that the U.S. Department of Agriculture might reduce harvested acreage in Friday's production report led to position squaring before its release, the analyst said.
The average production estimate for the 2007-08 crop year was 2.648 billion bushels, according to a survey of 24 analysts by Dow Jones Newswires, 29 million bushels above the 2.619 billion estimated by the USDA in September.
The average yield estimate for the 2007-08 crop year was 41.9 bushels per acre, according to 23 analysts surveyed, compared to the 41.4 bushels estimated in September by the USDA.
Soybeans could also draw some support from the weather in Brazil, a trader said. Although the weather in southern Brazil is favorable for soybeans, parts of the northern section of the country could use some moisture, he said.
Little support is seen from Tuesday's crop progress report of harvest activity halfway complete and within the range of analyst expectations.
The USDA reported that 50% of the U.S. soybean crop has been harvested as of Oct. 7, within the 45% to 53% expected by analysts and above the five-year average of 45%.
In Illinois, 68% of the crop has been combined, well above the average of 49%. In Iowa, 58% of the crop has been harvested, compared to the average of 59%.
On daily technical charts, November soybeans settled higher Tuesday and near the session high on short covering after recent lows. Bulls shouldn't be too encouraged by Tuesday's price action as prices are still in a downtrend from the September contract high, the analyst said. The bulls' next upside price objective is closing prices above solid resistance at US$9.73, with the next downside objective is closing prices below support at this week's low of US$9.23.
First resistance for November soybeans is seen at US$9.52 3/4, Tuesday's high and then at US$9.60. First support is seen at US$9.40 and then at Tuesday's low of US$9.33.
In overseas markets, crude palm oil futures ended with good gains on the Bursa Malaysia Derivative Exchange with the benchmark December contract gaining MYR53 at MYR2,645/tonne.
In other soybean news, the USDA attach¨¦ in Brazil forecasts that increased soy plantings and improving credit will likely lead to soybean production of 62.1 million metric tonnes, 3 million tonnes above last year.
Soybean futures on China's Dalian Commodities Exchange settled with strong gains following the overnight strength in CBOT soybeans, traders said. The benchmark May 2008 contract settled RMB78 higher at RMB4,163 a metric tonne.