January 1, 2006

 

CBOT Soy Outlook on Tuesday: Up 8-12 cents; following e-CBOT theme

  

 

The first trading day of the 2006 calendar year is seen beginning on firm footing for Chicago Board of Trade soybean futures, with the market taking its lead from overnight action, as traders position themselves for anticipated index fund buying and lingering worries over crop conditions in Argentina. Analysts call soybeans to open 8 to 12 cents per bushel higher.

 

In overnight electronic trade, March soybeans were 11 1/2 cents higher at US$6.25, March soymeal was US$3.40 higher at US$199.70 and March soyoil was 24 points higher at 22.14 cents per pound.

 

The overnight markets are setting the tone for a strong start to Tuesday's session, with hot and dry conditions in Argentina and outlooks for reallocated investment money to flow into grains providing support to prices, said Don Roose, president U.S. Commodities in West Des Moines Iowa.

 

Traders say strength in outside energy and metals markets should aid the supportive tone, but with prices trading near the upper end of there recent trading range, any failure to push higher may be seen as a selling opportunity.

 

Market technicians said initial resistance for traders to watch in March futures lies at US$6.14, the Dec. 27 low and also Friday's high. More important resistance lies at US$6.29, which is the high for the recent rally move. A sustained push above that latter ceiling would be needed to unleash a new bullish up leg. Support comes in at US$6.04 1/2 and then US$6.00.

 

DTN Meteorlogix Weather Service said Argentine growing areas will be mainly dry and becoming very hot this week, as temperatures may reach to near or above 100 degrees Fahrenheit. The next chance for scattered showers does not come until early next week and since this is a long range forecast it is somewhat uncertain, Meteorlogix said.

 

In Brazil, scattered weekend rains will maintain favorable growing conditions this week. However, medium and long range charts suggest a developing upper level ridge. This means drier and hotter weather, especially for Rio Grande Do Sul, by the end of this week and into next week, Meteorlogix added.

 

Meanwhile, a total of 869 delivery notices were redelivered against the January soybean contract. The primary issuer was a customer account at FCStone with 359 lots. The principle stopper was a customer account at Bank of America Securities at 500 lots. The last date assigned was Dec. 15.

 

A total of 892 delivery notices were redelivered against January soyoil. The house account at ADM Investor Services was the principal stopper at 873 lots. The last date assigned was Dec. 23.

 

The Commodity Futures Trading Commission said Friday in its commitments of traders report that large speculative traders held net long futures and options positions totaling 18,747 lots in soybeans, 18,509 contracts in soymeal while holding a net short position of 32,817 lots in soymeal as of Dec. 27.

 

On tap for Tuesday, the U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 10:00 a.m. CST (1600 GMT).

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended higher Tuesday as market participants ignored weak December export figures to focus on a rally in soyoil futures. The benchmark March CPO contract ended at MYR1,429 a metric tonne, up MYR14 from Friday, after moving between MYR1,422 and MYR1,430.

 

Rotterdam soybeans were most flat and soymeal prices were mostly higher, European vegoils were mixed.