January 31, 2006

 

CBOT Soy Outlook on Tuesday: Flat to down 2 cents; in tune with e-CBOT action

 

 

Soybean futures on the Chicago Board of Trade are seen starting Tuesday's open auction session slightly lower, in tune with overnight trade, as the market looks for stability following recent price spikes.

 

Analysts expect soybeans to open flat to 2 cents per bushel lower.

 

In overnight electronic trade, March soybeans were 1 3/4 cents lower at $5.97, March soymeal was $0.20 lower at $188 and March soyoil was 3 points higher at 22.23 cents per pound.

 

Trade consolidation is anticipated following strong gains of the past few days, with speculative buying showing signs of exhaustion Monday and improved rain chances for Argentina, upside movement seems a bit shaky, said a CBOT commission house broker.

 

Analysts said recent gains were primarily tied to technical factors and the addition of risk premium amid heat and dryness in Argentina. However, with some private forecasters predicting rain totals as high as 5 inches headed for Argentina, the reality of bearish fundamentals may take the edge off prices, unless speculative fund buying reemerges.

 

Otherwise, a quiet news front awaits the market, with China absent from the export sector amid Lunar New Year holidays.

 

Meanwhile, technical analysts said market bulls now have fresh upside technical momentum. A close above $6.10 would provide bulls with solid upside technical strength and would also fill a downside price gap created on the daily bar chart earlier this month.

 

First resistance for March soybeans is seen at $6.03 1/2 - Monday's high - and then at $6.10. First support is seen at $5.93 1/2 - Monday's low - and then at $5.90.

 

DTN Meteorlogix Weather Service said they have added some rainfall to Argentina's forecast for the 72-hour period. Rain also looks to become more active in the region during the early or middle part of next week. This, however, is a long range outlook and subject to significant day to day changes, Meteorlogix adds.

 

In Brazil, the southern belt should be hotter and drier through the end of this week before showers and cooler weather returns from the south, Meteorlogix said.

 

In overseas markets, Chinese soybean futures and Malaysian palm oil futures were closed due to the Lunar New Year Holiday.