February 10, 2006

 

CBOT Soy Outlook on Friday: Down 4-6 cents following e-CBOT, metals

 

 

Soybean futures at the Chicago Board of Trade were called to open down 4 cents to 6 cents Friday following weak overnight trade on a consolidation after this week's fund-led rally and following losses in precious metal futures, brokers said.

 

"Overnight trade was a little softer and I think we saw a little bit of movement from the cash side," said one CBOT analyst Friday.

 

"The choppy markets we've had this week and the weakness in the metals markets this morning might allow for a little bit of consolidation, a little profit-taking today," he added. "So we'll go with the overnight trade. Where the recent buying on dips has been very aggressive, we'll see if that will be present here also."

 

In overnight screen trade, the e-cbot March soybean contract settled down 5 3/4 cents at $5.82 a bushel. March soymeal ended down 70 cents a short tonne at $180.90, and March soyoil closed down 0.16 cent at 22.49 cents a pound.

 

A close above $6 would provide the bulls with better upside technical momentum, a technical trader said. However, a close below this week's low of $5.72 would provide the bears with some fresh downside technical momentum. First resistance for March soybeans is seen at $5.90 and then at $5.94 - Thursday's high. First support is seen at $5.85 and then at $5.79 - Thursday's low.

 

"We're still watching the technical side of things for an indication," agreed the first CBOT analyst. "Unfortunately, fundamentally we're struggling. The report yesterday didn't give us anything to go on."

 

The USDA on Thursday forecast a boost in U.S. 2005-06 soybean ending stocks to a record level of 555 million bushels due to disappointing export sales.

 

The 2005-06 world soybean ending stocks tally was put at 53.83 million metric tonnes, up from the January estimate of 53.15 million tonnes.

 

U.S. Midwest cash soybean basis bids were mixed Friday following a pickup in farmer sales on Thursday's CBOT rally, cash dealers said.

 

Spot cash soybean bids were flat Friday in Cedar Rapids, Sioux City and Des Moines, Iowa, and down 2 cents in Chicago, they noted. Decatur, Indiana bids fell 2 cents while bids in Memphis rose 2 cents, they noted.

 

Asian soy markets were mostly steady to firm overnight while European trade was mixed, traders noted.

 

At the Dalian Commodity Exchange, soybean futures settled slightly higher following a rally in CBOT soy, brokers said.

 

The benchmark May 2006 soybean contract settled RMB9 higher at RMB2,653; the most-widely held May 2006 soymeal contract settled down RMB4 at RMB2,281/tonne; and the benchmark September 2006 soyoil contract rose RMB19 to settle at RMB5,090/tonne.

 

Speculators are selling soymeal and buying soyoil, as the former is more likely to be impacted by demand reductions due to bird flu, while the latter is supported by the concept of developing renewable energy, an analyst said.

 

In Malaysia, crude palm oil futures on the Bursa Malaysia Derivatives settled slightly higher Friday despite bearish data amid pickup in buying interest on the cash market this week and gains in CBOT soyoil.

 

In its monthly report, the Malaysian Palm Oil Board said palm oil stocks totaled 1,539,796 tonnes at the end of January, down 4% on month. While stock levels are lower than December's record 1,603,800 tonnes, they are still "relatively high," said a Kuala Lumpur-based trader.

 

The benchmark April CPO contract ended at MYR1,466 a metric tonne, up just MYR2.

 

In Rotterdam, spot soybean prices were firm and soymeal prices were steady to weak, cash sources said.

 

U.S. soy traders continued to eye South American weather forecasts and early soy harvest reports from Brazil. They also noted the (U.S.) National Oilseed Processors Association was scheduled to release next week its members' January crush data.