January 13, 2006

 

CBOT Soy Outlook on Friday: Up 1-2 cents, in tune with e-CBOT

  

 

Soybean futures on the Chicago Board of Trade are seen starting Friday's session firmer, in tune with overnight action amid positioning ahead of the extended holiday weekend.

 

CBOT markets will be closed Monday in observance of the Dr. Martin Luther King Jr. holiday.

 

In overnight electronic trade, March soybeans were 1 1/2 cent higher at US$5.73 1/2, March soymeal was US$1.00 higher at US$180.00 and March soyoil was 11 points higher at 21.80 cents per pound.

 

Light profit taking by market shorts heading into the long weekend, following the markets over 60-cent slide in the past 6 trading days opens the door for modest gains to start the day, traders said.

 

However, analysts caution that there is nothing fundamental backing higher price action, as traders will think twice about taking on long positions in the face abundant supplies and improved weather outlooks for South American crops.

 

Nevertheless, as long as there is some uncertainty involving the South American crop, coupled with the threat of index fund buying and rumors of China securing cargoes of US soybean supplies this week, downside potential maybe limited.

 

U.S. Department of Agriculture said private exporters reported the sale of 227,000 metric tonnes of U.S. soybeans to unknown destinations for delivery in the 2005-06 marketing year.

 

Market technicians said that recent price weakness in beans could be an early visit from the February break seasonal weakness phenomenon. First resistance for March soybeans is seen at US$5.78 - Thursday's high - and then at US$5.83--the top of Thursday's downside price gap on the daily bar chart. First support is seen at US$5.69 - Thursday's low - and then at US$5.65.

 

DTN Meteorlogix Weather Service said the high pressure ridge over Brazil is weaker than the model guidance has indicated with a few showers having developed in Rio Grande do Sul in association with the front in Argentina. The latest guidance indicates the ridge may remain weak enough during the next 24-48 hours to allow for a few more showers in Rio Grande do Sul.

 

The ridge is forecast to build westward across southern Brazil into northern Argentina and Paraguay early next week then begin to weaken further by the middle of next week allowing for a front in Argentina to move northward into Rio Grande do Sul and Parana on Tuesday and Wednesday producing some light to moderate showers. Rain returns to central Argentina later next week with this activity moving into southern Brazil next weekend, Meteorlogix added.

 

Meanwhile, a total of 581 delivery notices were redelivered against the January soybean contract. A customer account at ABN Amro was the primary stopper of 260 lots. The last date assigned was Jan. 12. A total of 222 delivery notices were posted against January soyoil. The last date assigned was Jan. 11, and 65 delivery notices were reported against the January soymeal future, with a customer account at Tenco stopping all the lots. The last trade date assigned was Dec. 14.

 

Friday marks the last trading day for January soycomplex futures. The contracts expire at 13:00 EST.

 

In overseas markets, soybean futures on China's Dalian Commodity Exchange mostly settled lower Friday on losses in soybean futures on the Chicago Board of Trade, analysts said. The benchmark May 2006 soybean contract settled RMB29 a metric tonne lower at RMB2,653/tonne, after trading between RMB2,642/tonne and RMB2,663/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended mixed after another choppy, range-bound trading day as the market continued to struggle for direction. The benchmark March contract ended at MYR1,419 a metric tonne Friday, up MYR2 from Thursday. Other contracts ended between MYR3 lower and MYR5 higher.

 

Rotterdam soybeans and soymeal prices were lower, European vegoils were mixed.