January 27, 2006

 

CBOT Soy Outlook on Friday: Up 7-10 cents, e-CBOT, Argentina weather

 

 

Chicago Board of Trade soybean futures are seen starting the last trading day of the week on firm footing, in tune with overnight action, as concerns over hot, dry conditions in Argentina attract short covering interest.

 

Analysts expect soybeans to open 7-10 cents per bushel higher.

 

In overnight electronic trade, March soybeans were 9 1/2 cents higher at $5.82 1/2, March soymeal was $3.00 higher at $183.30 and March soyoil was 26 points higher at 21.77 cents per pound.

 

Lingering concerns over hot and dry conditions in Argentina coupled with Thursday's firm technical close should force some short covering, as participants trim exposure to weather risks heading into the weekend, analysts said.

 

Talk of recent buying from China ahead of the week long Lunar New Year holidays and firm outside markets are expected to aide the supportive early tone. However, bearish underlying fundamentals remain a hindrance to upside potential, with supply side fundamentals keeping traders leery of aggressively pushing buy side moves, analysts added.

 

DTN Meteorlogix Weather Service said drier, warmer weather in central Argentina this week will deplete soil moisture for developing soybeans. Hot and dry conditions are on tap for central Argentine growing areas during the weekend, with readings reaching the upper 90 degree Fahrenheit level, before scattered showers and thundershowers develop Tuesday.

 

Meanwhile, the upper level ridge over east-central Brazil continues to shift towards the northeast. This should allow for more shower activity in Mato Grosso, Mato Grosso Do Sul and Goias after a hotter and drier week this week, Meteorlogix added.

 

Market technicians said despite Thursday's and the overnight gains, market bears still have the near-term technical advantage. It will take a close back above $5.85 to provide market bulls with some fresh upside technical momentum.

 

First resistance for March soybeans is seen at $5.75 and then at $5.78. First support is seen at $5.65 1/2--Thursday's low--and then at $5.63 1/2--last week's low.

 

In news, North Korean officials say they have had no reported cases of bird flu among humans or poultry, refuting a report earlier this week that a woman was admitted to a Pyongyang hospital with the illness, a Beijing-based U.N. official said Friday.

 

In overseas markets, China's Dalian Commodity Exchange soybean futures settled higher Friday on short-covering ahead of the Lunar New Year holidays. The benchmark May 2006 soybean contract rose RMB19 a metric tonne to settle at RMB2,693/tonne, after trading between RMB2,684/tonne and RMB2,703/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended moderately higher after a subdued, range-bound trading day as participants mostly remained on the sidelines ahead of a long market closure. The benchmark April CPO contract ended at MYR1,443 a metric tonne, up MYR4 from Thursday. It was confined to a narrow range of MYR1,441 and MYR1,445.

 

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