March 1, 2006

 

CBOT Soy Outlook on Wednesday: Down 2-3 cents on e-CBOT, bird Flu

  

 

Soybean futures at the Chicago Board of Trade were called to open down 2-3 cents per bushel Wednesday following weak overnight trade, lingering concerns about the spread of a deadly strain of bird flu in Europe that could cut soy demand, and a second day of heavy deliveries against CBOT March soybeans without a key stopper, brokers said.

 

"There's not a lot of news out here," one CBOT soy analyst said. "We were expecting to see some of the stoppers recirculate those deliveries. We saw some spread activity that would indicate that that might happen."

 

Ample supplies of U.S. soybeans continued to make deliveries attractive and stopping unattractive, sources noted.

 

"End of the month (trade) didn't provide us with a lot of insight as to the trade yesterday," the CBOT soy analyst said. "We had some general support in new-crop contracts, but I don't see much out here to get excited. So I think we're going to start the month off with a bit of fundamental pressure."

 

Calls for a lower open Wednesday in CBOT corn and wheat futures, with the latter focusing on the chance of rain in the droughty U.S. Southern Plains, could also pressure soybeans, other traders said.

 

CBOT soyoil appeared to be the strongest leg of the CBOT soy complex Wednesday, as commercial Bunge Grain was a key stopper of deliveries for the second day in a row, according to the CBOT early Wednesday.

 

"I think some additional bird flu scares may have helped the market out too," the CBOT soy analyst said. "Bird flu could hurt the feed market, if they use less feed, they're still going to use oil - but they're going to crush less. So you have a little oil/meal trade going on here."

 

Lingering talk of greater U.S. biodiesel production and technical strength could also aid soyoil, sources said.

 

In overnight screen trade, the e-cbot May soybean contract settled down 3 cents at US$5.91 a bushel. May soymeal ended down 80 cents a short tonne at US$175.30, and May soyoil closed down 0.16 cent at 23.81 cents a pound.

 

A close in CBOT May soybeans below this week's low of US$5.81 would provide the bears with some fresh downside technical momentum, a technical trader said. A close above psychological resistance at US$6.00 would provide the bulls with better upside technical momentum.

 

First resistance for May soybeans is seen at US$5.98 1/2 - Tuesday's high - and then at US$6.00. First support is seen at US$5.90 and then at US$5.87 - Tuesday's low.

 

U.S. Midwest cash soybean basis bids were mixed Wednesday, cash dealers said. Spot cash soybean bids were down 2 1/2 cents in Peoria, up 1 cent in Council Bluffs, Iowa, and up 5 cents in Louisville, Ken., they noted.

 

At the Dalian Commodity Exchange, soybean futures settled higher, tracking CBOT gains, sources said.

 

The benchmark September 2006 soybean contract settled RMB5 higher at RMB2,722 a metric tonne; the September 2006 soymeal contract rose RMB3 to settle at RMB2,341/tonne; and the benchmark September 2006 soyoil contract settled RMB60 higher at RMB5,253/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Wednesday as a combination of factors, including a strengthening Malaysian ringgit, spurred profit-taking, sources said. The benchmark May CPO contract ended at MYR1,500 a metric tonne.

 

India Wednesday raised the base import price for crude palm oil by US$11 to US$437 a metric tonne. It also raised the base import price for crude soybean oil by US$23 to US$524/tonne, according to a notice posted on the Finance Ministry's Web site.

 

In Rotterdam, spot soybean prices were mixed and soymeal prices were weak, cash sources said.