January 25, 2006

 

CBOT Soy Outlook on Wednesday: Up 2-4 cents on e-CBOT, argentine weather

 

 

Soybean futures on the Chicago Board of Trade are seen starting Wednesday's open auction session on firm footing, following the overnight theme, as the market remains respectful of expected heat and dryness in Argentina.

 

Analysts expect soybeans to open 2-4 cents per bushel higher.

 

In overnight electronic trade, March soybeans were 2 3/4 cents higher at $5.74, March soymeal was $0.60 higher at $180.50 and March soyoil was 7 points higher at 21.59 cents per pound.

 

The market will attempt to play catch up after struggling Tuesday, following strength in corn, with traders keeping some premium in the market amid the risks of hot, dry conditions in Argentina heading into the weekend, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The market will be respectful of weather issues in South America, as traders reference back to when weather issues propelled futures last year in early February, added Roose.

 

DTN Meteorlogix Weather Service said temperatures may turn quite hot during this weekend and early next week in Argentina, with readings climbing to 100 degrees Fahrenheit. Long range charts suggest some chance for showers and more seasonal temperatures later next week. In Brazil, increasing coverage of shower and thundershower activity during this week is seen for soybean growing areas, improving crop conditions, Meteorlogix added.

 

Higher metals markets and talk of the need for further consolidation following the heavy losses the market incurred in prior weeks is expected to keep a level of support in the market. However, analysts do not expect any significant rallies, unless news of actual crop losses in South America surface, as bearish supply fundamentals remain a hindrance to upside potential.

 

Technical analysts said serious near-term chart damage has occurred recently. First resistance for March soybeans is seen at $5.78--the bottom of this month's downside price gap on the daily bar chart--and then at $5.83--the top of that same gap. First support is seen at $5.69 1/2--Tuesday's low--and then at $5.63 1/2--last week's low.

 

In overseas markets, China's Dalian Commodity Exchange soybean futures settled mixed Wednesday amid subdued trading, as many investors remained on the sidelines after liquidating most of their positions ahead of the week-long market holiday next week. The benchmark May 2006 soybean contract inched up RMB2 a metric tonne to RMB2,685/tonne, after trading between RMB2,671/tonne and RMB2,696/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended marginally higher Wednesday in cautious, range-bound trading ahead of next week's holidays, traders said. The benchmark April CPO contract ended MYR3 higher at MYR1,435 a metric tonne, after moving in a narrow range of MYR1,430 to MYR1,437/tonne.

 

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