December 5, 2007

 

CBOT Soy Outlook on Wednesday: Up 4-6 cents, technical buys, South American weather, outsides

 

 

Chicago Board of Trade soybean futures are expected to start Wednesday's day session higher on follow-through buying from Tuesday's firm close, with strength in outside markets and South American weather concerns supportive.

 

Crude oil futures, the U.S. dollar index, and metal futures are higher in early action.

 

CBOT soybean futures are called to start the session 4 to 6 cents higher.

 

In overnight e-CBOT trading, January soybeans were 5 3/4 cents higher at US$10.97 1/4 per bushel, and March soybeans were 5 1/2 cents higher at US$11.15.

 

Technical strength from Tuesday in conjunction with higher crude oil, metals, and palm oil futures - as well as talk of private weather forecasters taking some moisture out of Argentina's forecast - have soybeans poised for a higher start, analysts said.

 

Fresh speculative buying remains a feature in the market place, as a bullish underlying trend continues to keep aggressive selling idle aside from timely profit taking pressure, traders added.

 

A technical analyst said soybean bulls still have the solid near-term technical advantage, amid still no solid technical clues that a market top is close at hand.

 

The next upside price objective for January soybeans is to push and close prices above solid resistance at the contract high of US$11.09 1/2 a bushel, he said. The next downside price objective is closing prices below strong support at this week's low of US$10.68 1/2, he added. First resistance for January soybeans is seen at Tuesday's high of US$10.94 1/4 and then at US$11.00. First support is seen at US$10.88 and then at US$10.80.

 

The DTN Meteorlogix Weather Service said recent rainfall in Argentina has helped favor crop development during the past day or two. However, more rain is needed. It is unlikely that significant rainfall would occur during the seven day period.

 

In Brazil, rains will maintain favorable growing conditions from Parana northward during this period. Less rainfall is projected for Rio Grande Do Sul during this period. Soil moisture supplies are slowly diminishing in this area, Meteorlogix reports.

 

In deliveries, December soyoil deliveries totaled 1,615 lots. Issuers and stoppers were scattered among various commission houses, with customer accounts at Man Professional Clearing the primary issuer and stopper of 783 and 735 lots, respectively. The house account at ADM Investor Services stopped 35 lots. The last trade date assigned was Dec. 4.

 

December soymeal deliveries totaled 298 lots. Issuers and stoppers were scattered among various commission houses, with customer accounts at Man Professional Clearing the primary an issuing and stopping of 130 lots. The last trade date assigned was Dec. 4.

 

In other news, the China National Grain and Oils Information Center Wednesday kept the country's corn, wheat and soybean output forecasts this year unchanged from its report last month. The state-backed CNGOIC estimated that production of corn will reach 148 million metric tonnes, soybeans 14 million tonnes, and wheat 106 million tonnes this year.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday on overnight gains in Chicago Board of Trade soybeans. The benchmark September 2008 soybean contract settled RMB21 higher at RMB4,322 a metric tonne after trading between RMB4,304 and RMB4,343/tonne.

 

Crude palm oil futures traded on Malaysia's derivatives exchange recovered sharply in the last hour of trading to end higher Wednesday, mainly after crude oil producing countries didn't make any change in their production quotas, said trade participants. The benchmark February contract ended MYR21 higher at MYR2,910/tonne, close to an intraday high of MYR2,914/tonne.