February 15, 2006

  

CBOT Soy Outlook on Wednesday: Mixed, Argentina weather vs. USDA Forum

 

 

Soybean futures at the Chicago Board of Trade were called to open mixed Wednesday as forecasts for dry near-term weather in Argentina's soy belt could be offset by weak overnight trade and possible bearish data from the U.S. Department of Agriculture in this week's annual Outlook Forum, brokers said.

 

In overnight screen trade, the e-cbot May soybean contract settled down 1 1/4 cents at US$5.94 3/4 a bushel. May soymeal ended flat at US$184.30, and May soyoil closed down 0.08 cent at 22.35 cents a pound.

 

CBOT May soybeans, which has the largest open interest, takes top step in CBOT soybean pit trade Wednesday.

 

A close above US$6.10 in the CBOT May contract would provide the bulls with fresh upside technical momentum, a technical trader said. A close below last week's low of US$5.85 would provide the bears with some fresh downside technical momentum.

 

First resistance for May soybeans is seen at US$5.99--Tuesday's high--and then at US$6.02--this week's high. First support is seen at US$5.93 1/2--Tuesday's low-and then at US$5.90.

 

Dry weather in Argentina's soy growing belt was expected to be of note Wednesday, brokers said.

 

"There will be little or no rainfall in the Argentine grain belt for the next 7 days," said Mike Palmerino, a meteorologist at Meteorlogix weather service. "It's going to be turning significantly warmer. We would expect to see temperatures in the 90s for the next 7 days."

 

He noted that Argentina's soy belt was of less concern recently as it received good rains in early February and temperatures have been cooler.

 

"But I think Argentina is going to now overtake Brazil as the area of concern (for soy traders,)" Palmerino said Wednesday.

 

He noted forecasts also called for rains of 0.10 to 0.50 inch across Brazil's Rio Grande Do Sul during the next couple days.

 

On a bearish note for CBOT soybeans, many analysts said they expected the USDA on Friday to estimate 2006-07 U.S. soybean ending stocks at possibly more than 600 million bushels. The USDA last week forecast 2005-06 soy ending stocks at a record 555 million bushels.

 

"We're also going to be watching what the USDA estimates in terms of yields," said Don Roose, of U.S. Commodities. "And we're going to watch what they say about U.S. biodiesel production and use of the DDGS (an ethanol by-product.)"

 

U.S. Midwest cash soybean basis bids were mixed Wednesday, cash dealers said.

 

Spot cash soybean bids were down 4 1/2 cents in Peoria, flat in Sioux City and Cedar Rapids, Iowa, and flat in Cincinnati, they noted.

 

In soy export news, Taiwan's Breakfast Soybean Procurement Association Kaohsiung branch rejected all offers in a tender for 40,000 to 60,000 tonnes of U.S. or Brazilian soybeans Wednesday as offers too high, a Taipei-based trader said.

 

Egypt's Food Industries Holding Co. confirmed Wednesday it was tendering to buy 15,000 metric tonnes of soya bean oil on Feb. 21.

 

Soybean futures on China's Dalian Commodity Exchange settled mixed Wednesday after a quiet trading session, with the benchmark September 2006 soybean contract settling RMB7 lower at RMB2,731 a metric tonne.

 

The most widely held May 2006 soymeal contract settled RMB2 lower at RMB2,287/tonne, while the benchmark September 2006 soyoil contract fell RMB9 to settle at RMB5,068/tonne.

 

In Malaysia, crude palm oil futures on the Bursa Malaysia Derivatives ended higher Wednesday amid strong export numbers, fueling expectations the market may rally toward one-year highs of over MYR1,500 a metric tonne in the coming days, sources said.

 

The benchmark April CPO contract ended at MYR1,484/tonne, up MYR7 from Tuesday.

 

In Rotterdam, spot soybean were lower and spot soymeal prices were mostly steady, cash sources said.