January 3, 2007

 

CBOT Soy Outlook on Wednesday: Down 6-8 cents; e-CBOT; spillover, LatAm weather

 

 

Chicago Board of Trade soybean futures are seen starting Wednesday's day session on the defensive, taking its cue from overnight trade, with bearish South American weather and spillover pressure influencing prices, analysts said.

 

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

 

In e-CBOT trade, January soybeans were 8 cents lower at US$6.75 1/2 and March was 8 1/4 cents lower at US$6.89 per bushel.

 

The soybean market has some sensible price pressure in relation to sharp declines in neighboring grain futures, with favorable crop conditions in Argentina and Brazil dominating attention amid the absence of any strong speculative buys in overnight trade, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Light hedge related pressure to start the New Year is seen aiding the lower theme, with price weakness in crude oil, Malaysian palm oil, and grain futures plotting a lower course for soybeans in early trade, analysts added.

 

A quiet news front is expected to keep technical considerations in play, as traders get back up to speed coming out of an extended holiday weekend.

 

A technical analyst said the next upside price objective for March soybeans is to close prices above solid resistance at the contract high of US$7.06 a bushel. The next downside price objective is closing prices below solid support at US$6.75, which is the bottom of an upside price gap created on the daily bar chart last week.

 

First resistance for March soybeans is seen at Friday's high of US$6.98 1/2 and then at US$7.00. First support is seen at US$6.90 and then at Friday's low of US$6.87.

 

The DTN Meteorlogix weather forecast said scattered showers and cooler temperatures in Argentina will favor developing soybeans. In Brazil, scattered rains and cooler temperatures will maintain favorable conditions for soybeans, Meteorlogix reports.

 

In deliveries, a total of 62 delivery notices were posted against January soybeans. The last trade date assigned was Dec. 26. There were 142 delivery notices posted against the December soyoil futures. The last trade date assigned was Dec. 29. Soymeal delivery notices totaled 100 lots, with the house account at Bunge Chicago the principle stopper of 57 lots. The last trade date assigned was Dec. 28.

 

The Commodity Futures Trading Commission on Friday reported large speculative traders were net long 46,601 combined soybean futures and options contracts as of Dec. 26, compared with net longs of 45,207 in the previous week. Speculative funds were reported net long soyoil futures and options to the tune of 47,590 lots, compared with net longs of 50,904 lots in the prior week. Large speculative traders were reported net long combined futures and options positions in soymeal by 11,840 lots, compared with net longs of 11,007 contracts last week.

 

On tap for Wednesday, the U.S. Department of Agriculture is scheduled to release its weekly export inspection report at 11:00 a.m. EST.

 

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

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended sharply lower Wednesday as the market succumbed to pressure from weakness in soyoil futures, a strengthening ringgit and improving weather conditions in key growing regions, analysts said. The benchmark March contract ended down MYR33 at MYR1,962 a metric tonne.