January 9, 2006

 

CBOT Soy Outlook on Monday: Down 10-12 cents on e-CBOT, Argentine weather

 

 

Chicago Board of Trade soybean futures are expected to start Monday's session on the defensive, keying off overnight action as improved weather outlooks for Argentina and pre crop report positioning weighs on prices.

 

Analysts call soybeans to open 10 to 12 cents lower.

 

In overnight electronic trade, March soybeans were 10 1/2 cents lower at US$6.00 1/2, March soymeal was US$2.90 lower at US$185.80 and March soyoil was 27 points lower at 22.72 cents per pound.

 

Unexpected weekend rains in parts of Argentina, improved long range forecasts for South America coupled with trade positioning in front of Thursday's crop report following a poor technical close on Friday sets the stage for lower price action, analysts said.

 

Technical analysts said a close in March soybeans below US$6.04 1/2 would begin to produce some near-term chart damage. First resistance for March soybeans is seen at US$6.21 1/2--Friday's high--and then at US$6.25. First support is seen at US$6.10--Friday's low--and then at US$6.04 1/2.

 

However, traders remain on guard for the possible emergence of speculative fund buying on breaks, but with improved rain potential for Argentina and bearish data expected in Thursday's U.S. Department of Agriculture reports, upside momentum does not have fundamental support, traders added.

 

DTN Meteorlogix Weather Service said Monday's long range charts indicate the ridge of high pressure currently bringing hot, dry weather to the corn and soybean areas of Argentina will move off to the east during the second half of the week allowing a frontal boundary to become nearly stationary over the region with tropical moisture flowing down from the north. This would allow for a significant rainfall event for the corn and soybean belt ending the stressful pattern they have seen during the past few weeks, Meteorlogix said.

 

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 23,884 lots in soybeans, 22,878 contracts in soymeal while holding a net short position of 17,578 lots in soyoil as of Jan. 3.

 

Meanwhile, a total of 1,235 delivery notices were posted against January soyoil. Customer accounts at the Century Group Div of Man Financial were the primary issuer of 434 lots and principle stopper of 342 lots. The last date assigned was Jan. 6.

 

On tap for Monday, 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, soybean futures on China's Dalian Commodity Exchange settled lower Monday, dragged down by losses in soybean futures on the Chicago Board of Trade Friday, traders said. The benchmark May 2006 soybean contract settled RMB24 lower at RMB2,743 a metric tonne after trading between RMB2,725/tonne and RMB2,761/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Monday, dragged down by weakness in soyoil futures and a strengthening Malaysian ringgit. The benchmark March CPO contract ended at MYR1,423 a metric tonne, down MYR10 from Friday after moving between MYR1,422 and MYR1,431.

 

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