January 4, 2006

 

CBOT Soy Outlook on Wednesday: Up 1-3 cents on e-CBOT, Argentine weather

 

 

Soybean futures on the Chicago Board of Trade are seen firmer to start Wednesday's session, in tune with the overnight theme, as the market watches hot and dry conditions in Argentina as well as the potential for index fund related buying. Analysts call soybeans to open 1 to 3 cents per bushel higher.

 

In overnight electronic trade, March soybeans were 2 1/4 cents higher at USUS$6.30 3/4, March soymeal was USUS$1.80 higher at USUS$199.50 and March soyoil was unchanged at 23.24 cents per pound.

 

The supportive tone is geared toward technical strength, as speculative buying coupled with the backdrop of stressful conditions for Argentine soybean crops, prices have good support, said a CBOT commission house broker.

 

The influence of speculative interest in the market will go a long way in determining price direction, with traders on guard for another round of the fund buying that increased open interest in CBOT soybeans Tuesday by 8,146 contracts based on preliminary volume and open interest figures released by the exchange. However, analysts say if the speculative buying does not resurface then profit taking pressure may emerge amid bearish underlying fundamentals.

 

Nevertheless, technical analysts said market bulls have momentum on their side, with their next upside price objective, resistance at the USUS$6.50 level. First resistance for March soybeans is seen at USUS$6.32 1/2-- Tuesday's high--and then at USUS$6.38. First support is seen at USUS$6.24--Tuesday's low--and then at USUS$6.20.

 

DTN Meteorlogix Weather Service said it continues to look mainly dry and hot in Argentine growing areas, with highs reaching to the upper 90s or even low 100 degree Fahrenheit during the next 6 or 7 days. Today's long range charts show no significant rain and thunderstorm activity for soybean areas until late next week, Meteorlogix added.

 

In Brazil, favorable growing conditions are seen from northern Parana northward. The southern belt has adequate soil moisture at this time but this will be diminishing under a hotter and drier weather pattern for the next week or more, Meteorlogix said.

 

Meanwhile, a total of 416 delivery notices were redelivered against the January soybean contract. The primary issuers were customer accounts at J.P. Morgan and RJ O'Brien with 165 and 173 lots respectively. The principle stoppers were customer accounts at Bank of America Securities and Infinium Capital Management at 100 and 186 lots respectively. The last date assigned was Dec. 27.

 

A total of 1,266 delivery notices were posted against January soyoil. The house account at ADM Investor Services was the primary issuer at 1,049 lots. The principle stopper was Iowa Grain at 866 lots. The last date assigned was Dec. 29.

 

In news, Brazil's Agriculture Ministry said Tuesday that it will make 200 million Brazilian reals (USUS$86.9 million) available in credit this week to help farmers fight Asian soybean rust in the central-west, Brazil's soy belt.

 

In overseas markets, soybean futures on China's Dalian Commodity Exchange settled sharply higher Wednesday after CBOT soybeans rallied to a fresh high, said analysts. The benchmark May 2006 soybean contract settled RMB89 higher at RMB2,775 a metric tonne after trading between RMB2,745 and RMB2,793/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended moderately higher Wednesday, with the benchmark contract hitting a two-month high following a rally in soyoil futures. The benchmark March CPO ended MYR8 higher at MYR1,437 a metric tonne.

 

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