February 1, 2006

 

CBOT Soy Outlook on Wednesday: Down 6-8 cents; improved Argentine weather

  

 

Analysts expect Chicago Board of Trade soybean futures to start Wednesday's open auction session on weak footing, backpedaling from recent gains on improved weather outlooks for Argentine crops.

 

Analysts expect soybeans to open 6 to 8 cents per bushel lower.

 

In overnight electronic trade, March soybeans were 7 1/2 cents lower at US$5.86 3/4, March soymeal was US$2.90 lower at US$182.10 and March soyoil was 27 points lower at 22.08 cents per pound.

 

The market's strength is only as good as the latest weather forecast, and with rain expected for Argentine growing areas, futures are expected to extract some risk premium, said a CBOT commission house broker.

 

DTN Meteorlogix Weather Service said episodes of scattered thunderstorms will be in the region during the next 3-4 days. This will help to ease any developing stress to corn and soybeans caused by last weekend's hot temperatures.

 

In Brazil, the southern belt should be hot and mainly dry during the next 3-5 days, before some chance for showers and cooler weather return, Meteorlogix said.

 

Futures are in the midst of a weather market, and gyrations in crop conditions in South America as soybeans move through there key growing stages is expected to keep volatility in the market. Light profit taking from recent gains in the absence of fresh fundamental support is seen aiding the defensive tone as well, traders said.

 

However, until the uncertainty of the South American crop can be eliminated and there remains the potential for fresh commodity fund buying, downside pressure may be limited.

 

Meanwhile, market technicians said market bulls still have some upside technical momentum, and a close above US$6.10 would fill a downside price gap created on the daily bar chart earlier this month and provide solid upside technical strength.

 

First resistance for March soybeans is seen at US$5.99--Tuesday's high--and then at US$6.03 1/2--this week's high. First support is seen at US$5.91--Tuesday's low--and then at US$5.85.

 

Midwest interior cash basis levels are steady to down 2 cents in Iowa, and mostly steady in Illinois, Minnesota.

 

In news, Indian soybean processors have sold 24,000 metric tonnes of soymeal to buyers in Japan at around US$245 a tonne, cost and freight, a senior industry official said Wednesday.

 

Rotterdam soybeans and soymeal prices were mostly lower, and European vegoils were mixed. In overseas markets, Chinese soybean futures and Malaysian palm oil futures were closed due to the Lunar New Year Holiday.