January 19, 2006

 

CBOT Soy Outlook on Thursday: Up 1-3 cents; e-CBOT, oversold technicals

 

 

Soybean futures on the Chicago Board of Trade are seen starting Thursday's open auction session firm, in tune with overnight action amid technically oversold conditions.

 

Analysts expect soybeans to open 1-3 cents per bushel higher.

 

In overnight electronic trade, March soybeans were 2 1/2 cents higher at US$5.68 1/4, March soymeal was US$0.50 higher at US$178.00 and March soyoil was 19 points higher at 21.35 cents per pound.

 

The market has become oversold after declining in 8 of the last 9 trading days, and may be overdue to consolidate, traders said.

 

The 9-day relative strength index for March soybeans stood at 26.88 at Wednesday's close. A figure below 30.00 is considered oversold.

 

A firming cash basis at the U.S. Gulf of Mexico amid rumors of China securing cargoes of U.S. soybeans ahead of the Lunar New Year Holidays is seen aiding the supportive tone. Strength in outside markets with metals climbing early Thursday is expected to lend strength amid the absence of any fresh news to stimulate momentum.

 

Traders say the market has held up fairly well in the face of overwhelmingly bearish fundamentals, but with diminished concerns over South American crops, bird flu worries overseas and a sluggish export pace, a bearish mindset remains the dominant force in the market.

 

Technical analysts said first resistance for March soybeans is seen at US$5.69 1/2--the top of Wednesday's downside price gap--and then at US$5.78--the bottom of last week's downside price gap on the daily bar chart. First support is seen at US$5.63 1/2--Wednesday's low--and then at US$5.60.

 

Meanwhile, DTN Meteorlogix Weather Service said scattered showers and thundershowers are expected through much of Brazil's soybean belt during the next 2-3 days with more in the southern belt after that. Improving crop conditions in the Mato Grosso Do Sul and Parana provinces are expected during this period. Favorable conditions continue elsewhere in the region, Meteorlogix said.

 

In Argentina, recent rainfall and cooler temperatures have eased stress to corn and soybeans. During the 10 day forecast period we have a slight chance for light showers tomorrow and a little better chance for showers next Tuesday.

 

U.S. Department of Agriculture's weekly export sales report, normally released on Thursdays will be delayed to Friday 7:30 CST due to Monday's Dr. Martin Luther King Jr. Holiday.

 

In overseas markets, China's Dalian Commodity Exchange soybean futures settled mixed Thursday, with buying underpinning some contracts after the benchmark found key technical support during the session, traders said. The benchmark May 2006 soybean contract settled unchanged at RMB2,644 a metric tonne, after trading between RMB2,636/tonne and RMB2,654/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Thursday, boosted by expectations of strong export growth in January. The benchmark April CPO contract ended up MYR6 at MYR1,436 a metric tonne.

 

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