January 10, 2006

 

CBOT Soy Outlook on Tuesday: +2-4 cents on e-CBOT; Monday drop seen overdone

 

 

Chicago Board of Trade soybean futures are seen starting Tuesday's session on firm footing, taking its cue from overnight action, as the market attempts to bounce back from Monday's declines amid ideas the losses were overdone.

 

Analysts call soybeans to open 2 to 4 cents higher.

 

In overnight electronic trade, March soybeans were 4 1/2 cents higher at US$5.98 1/2, March soymeal was US$0.20 higher at US$184.80 and March soyoil was 2 points higher at 22.61 cents per pound.

 

Monday's late speculative buying and overdone ideas should provide early support to prices, but with bearish weather outlooks for South American growing areas and a major crop report looming in front of the market, upside potential maybe limited, said a CBOT commission house broker.

 

Traders say upside price movement will lay in the hands of speculative traders, with fundamental outlooks making it tough for participants to aggressively push the buy side of the market heading into Thursday's crop report without a weather threat in South America.

 

U.S. Department of Agriculture is scheduled to release its annual crop production, supply and demand and quarterly grain stocks reports Thursday 7:30 a.m. CST (1330 GMT).

 

Market technicians said Monday's price break produced near-term chart damage and it will take a close back above US$6.10 to fill Monday's big downside price gap and repair the chart damage. First resistance for March soybeans is seen at US$5.99--Monday's high--and then at US$6.05. First support is seen at US$5.89 1/2--Monday's low-and then at US$5.85.

 

DTN Meteorlogix Weather Service said today's long range charts indicate the ridge of high pressure which has brought very hot weather to the corn and soybean areas of Argentina will move off to the east during the next few days allowing a frontal boundary to become nearly stationary over the region with tropical moisture flowing down from the north. This will 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 added.

 

Meanwhile, a total of 624 delivery notices were redelivered against the January soybean contract. The primary issuers were a customer account at Bank of America and the house account at Term Commodities with 294 and 271 lots respectively. The principle stopper was a customer account at the Century Group Div of Man Financial with 353 lots. The last date assigned was Jan. 6.

 

A total of 994 delivery notices were posted against January soyoil. Customer accounts at Century Group Div. of Man Financial were the primary issuer at 342 lots and stopper with 328 lots. The last date assigned was Jan. 9. A total of 174 notices were posted against soymeal, with customer accounts at UBS Securities issuing the lots and customers of Prudential Financial stopping all the lots.

 

In news, Argentina's year-on-year soybean exports rose 171% in October as China, the world's top soybean importer, bought more, the Agriculture Secretariat reported Monday. Argentina exported 302,583 metric tonnes of October soybeans, up from 111,564 tonnes a year ago. China accounted for almost 72% of Argentina's soybean exports in October.

 

Preliminary tests indicated that a new patient may have contracted the deadly H5N1 strain of bird flu in central Turkey, a Health Ministry official told The Associated Press Tuesday.

 

In overseas markets, soybean futures on China's Dalian Commodity Exchange settled lower Tuesday on Monday's losses in CBOT soybean futures. The benchmark May 2006 soybean contract settled RMB19 lower at RMB2,724 a metric tonne, after trading between RMB2,710/tonne and RMB2,735/tonne.

 

Crude palm oil futures on Bursa Malaysia Derivatives were closed Tuesday because of a national holiday. Trading will resume Wednesday.

 

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