December 24, 2008

 

CBOT soy outlook on Wednesday: Up 1-2 cents on fundamental support

 

 

Chicago Board of Trade soybean futures are expected to begin Wednesday's day session higher, as fundamental support serves as an upside catalyst in thin pre-holiday trade.

 

CBOT soy futures are called 1 cent to 2 cents higher.

 

In overnight electronic trading, January soybeans ended 2 cents higher at US$9.03, and March soybeans finished 1 3/4 cents higher at US$9.06 3/4. March soymeal was US$0.70 lower at US$279.80 per short tonne, while March soyoil ended 8 points higher at 31.60 cents per pound.

 

The combination of dryness concerns for South American crops and underlying Chinese demand are bullish features helping futures decouple from outside markets recently, said Don Roose, president of US Commodities in West Des Moines, Iowa.

 

The ability of nearby futures to settle above the psychological US$9.00 level as well as major moving average resistance experienced Tuesday is expected to support a higher theme Wednesday, analysts said.

 

The market's relentless rally of the past three weeks is producing end-of-the-year short-covering, but futures have become a little overbought and weakness in energy prices and the stock market could limit upside potential, Roose added.

 

Traders anticipate a thinly traded market, with participants taking a cautious approach ahead of the Christmas Day closure and Wednesday's shortened trading session. CBOT markets will close at 1:00 p.m. EST.

 

A technical analyst said the next upside price objective for March soybeans is to push and close prices above solid technical resistance at US$9.29 3/4 a bushel. The next downside price objective is pushing and closing prices below solid technical support at last week's low of US$8.43 1/4 a bushel.

 

First resistance for March soybeans is seen at US$9.07 1/2 and then at US$9.29 3/4. First support is seen at Tuesday's low of US$8.81 3/4 and then at US$8.75.

 

The DTN Meteorlogix weather forecast said dry weather with only a few light showers are on tap for Argentina during the next seven days. Temperatures will vary somewhat, cool at times and hotter at times.

 

In Brazil, showers and cooler temperatures are in store for Rio Grande do Sul Wednesday. Conditions will turn drier and cooler Thursday, and warmer again Friday, Meteorlogix forecasts.

 

In overseas markets, China's soybean futures inched up Wednesday on the Dalian Commodity Exchange, tracking CBOT's bounce on technical grounds as traders took some comfort from the government's moves to stockpile grains. The benchmark May 2009 soybean contract gained 1.1 percent to settle at RMB3,235 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange rose as much as 2.2 percent Wednesday on expectations of record high palm oil exports this month and short covering ahead of the holidays. The benchmark March contract on Bursa Malaysia Derivatives ended MYR29 higher at MYR1,559/tonne.