January 18, 2006

 

CBOT Soy Outlook on Wednesday: Down 4-6 cents, bearish market fundamentals

 

 

Opening calls for Chicago Board of Trade soybean futures are for prices to start Wednesday's session on weak footing, as near-term fundamental outlooks weigh on prices.

 

In overnight electronic trade, March soybeans were 5 3/4 cents lower at US$5.65 1/2, March soymeal was US$2.10 lower at US$178.20 and March soyoil was 11 points lower at 21.11 cents per pound.

 

The bearish impact of improving crop conditions in South America, sluggish export demand and mounting pressures associated with record nearby inventories have futures struggling to hold underlying support levels, analysts said.

 

Carryover selling from Tuesday's weak close and the subsequent decline in overnight action is seen attracting long liquidation, with the active March future poised to gap below recent lows. The absence of support in outside markets, and as long as commodity index fund buying is inactive, futures will have trouble holding underlying support, said a CBOT commission house broker.

 

Market technicians said first resistance for March soybeans is seen at US$5.78 and then at US$5.83--the top of last week's downside price gap on the daily bar chart. First support is seen at US$5.69-last week's low--and then at US$5.65.

 

Nevertheless, with oversold market conditions and as long as there is some uncertainty tied to South American crops, downside potential may remain limited in the near term, traders added.

 

Meanwhile, DTN Meteorlogix Weather Service said scattered showers and more moderate temperatures this week will ease stress to developing soybeans in Brazil's Rio Grande do Sul province. Above normal temperatures and mostly below normal rainfall is seen for Parana and southern Mato Grosso, while generally favorable conditions are forecast for northern Mato Grosso.

 

In Argentina, recent rainfall and cooler temperatures have eased stress to corn and soybeans. However, it looks to be drier for most of the 7 day period with some warmer to hotter weather possible. In news, China reported a 35-year-old woman in southwestern China has become the country's sixth human fatality from bird flu, the government said Wednesday.

 

In overseas markets, China's Dalian Commodity Exchange soybean futures settled sharply lower Wednesday on a fall in CBOT soybean futures Tuesday and new cases of foot-and-mouth disease in two Chinese provinces, traders said. The benchmark May 2006 soybean contract lost RMB39 a metric tonne to RMB2,644/tonne, after trading between RMB2,626/tonne and RMB2,667/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended marginally lower Wednesday amid sluggish market activity. The benchmark April CPO contract ended at MYR1,430 a metric tonne, down MYR2 from Tuesday.

 

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

 

 

Opening calls for Chicago Board of Trade soybean futures are for prices to start Wednesday's session on weak footing, as near-term fundamental outlooks weigh on prices.

 

In overnight electronic trade, March soybeans were 5 3/4 cents lower at US$5.65 1/2, March soymeal was US$2.10 lower at US$178.20 and March soyoil was 11 points lower at 21.11 cents per pound.

 

The bearish impact of improving crop conditions in South America, sluggish export demand and mounting pressures associated with record nearby inventories have futures struggling to hold underlying support levels, analysts said.

 

Carryover selling from Tuesday's weak close and the subsequent decline in overnight action is seen attracting long liquidation, with the active March future poised to gap below recent lows. The absence of support in outside markets, and as long as commodity index fund buying is inactive, futures will have trouble holding underlying support, said a CBOT commission house broker.

 

Market technicians said first resistance for March soybeans is seen at US$5.78 and then at US$5.83--the top of last week's downside price gap on the daily bar chart. First support is seen at US$5.69-last week's low--and then at US$5.65.

 

Nevertheless, with oversold market conditions and as long as there is some uncertainty tied to South American crops, downside potential may remain limited in the near term, traders added.

 

Meanwhile, DTN Meteorlogix Weather Service said scattered showers and more moderate temperatures this week will ease stress to developing soybeans in Brazil's Rio Grande do Sul province. Above normal temperatures and mostly below normal rainfall is seen for Parana and southern Mato Grosso, while generally favorable conditions are forecast for northern Mato Grosso.

 

In Argentina, recent rainfall and cooler temperatures have eased stress to corn and soybeans. However, it looks to be drier for most of the 7 day period with some warmer to hotter weather possible. In news, China reported a 35-year-old woman in southwestern China has become the country's sixth human fatality from bird flu, the government said Wednesday.

 

In overseas markets, China's Dalian Commodity Exchange soybean futures settled sharply lower Wednesday on a fall in CBOT soybean futures Tuesday and new cases of foot-and-mouth disease in two Chinese provinces, traders said. The benchmark May 2006 soybean contract lost RMB39 a metric tonne to RMB2,644/tonne, after trading between RMB2,626/tonne and RMB2,667/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended marginally lower Wednesday amid sluggish market activity. The benchmark April CPO contract ended at MYR1,430 a metric tonne, down MYR2 from Tuesday.

 

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