March 7, 2006

 

CBOT Soy Outlook on Tuesday: Flat-down on US rains, South America harvest

 

 

Soybean futures at the Chicago Board of Trade were called to open flat to lower Tuesday, pressured by the building harvest of a large South American soybean crop and forecasts for more soil-replenishing U.S. Midwest rains this week ahead of the U.S. planting season, brokers said.

 

Lingering worries about a possible slowdown in global soy demand due to the global spread of a deadly strain of bird flu were also expected to weigh on prices, they noted.

 

"Soybeans are in a technical range, and there's not a lot of news today," said Tim Hannagan, a grain and oilseed analyst at Alaron Trading on Tuesday.

 

"Yesterday they traded the weather and later this week they'll begin trading estimates for Friday's USDA report," he added. "But today, I think we'll trade both sides, down 3-1/2 to 4 cents to up the same amount."

 

The U.S. Department of Agriculture will release on Friday its monthly crop supply and demand data.

 

In overnight screen trade, the e-cbot May soybean contract settled down 1 cent at US$5.99 1/2 a bushel. May soymeal ended down 10 cents a short tonne at US$175.80, and May soyoil closed down 0.09 cent at 24.70 cents a pound.

 

Prices for CBOT May soybeans are now in the middle of a choppy trading range on the daily bar chart, said a technical trader. It will take a close above resistance at the February high of US$6.17 to provide the bulls with solid upside technical power and push prices out of the recent choppy trading range.

 

A close below the February low of US$5.81 in CBOT May soybeans would produce a bearish downside breakout from the aforementioned trading range and suggest more price weakness to come, he added.

 

First resistance for May soybeans was seen at US$6.06--Monday's high--and then at US$6.11. First support was seen at US$5.95 and then at US$5.91 1/2--Monday's low.

 

There were 815 deliveries posted Tuesday against CBOT March soybeans, with no major stoppers, brokers noted.

 

Soybean contracts registered with the CBOT for delivery purposes as of Monday afternoon fell 142 lots to 3,700 lots.

 

There were 229 deliveries posted Tuesday against CBOT March soyoil. No soymeal deliveries were posted.

 

There were 6,343 soyoil registrations, unchanged from the previous day's tally, and 34 soymeal registrations, also unchanged from Friday.

 

U.S. Midwest cash soybean basis bids were mostly steady to firm Tuesday, cash dealers said.

 

Spot cash soybean bids were up 2 cents in central Illinois, up 5 cents in Milwaukee, Wisconsin, and down 1 cent in St. Joseph, Missouri, they noted.

 

Weather forecasts called for light showers across the central and western U.S. Midwest soy belt while light rains were also forecast for both the western and eastern Midwest on Thursday, according to Meteorlogix weather service.

 

In Brazil, light rains were expected in the northern and the southern portions of the soy belt Tuesday and Wednesday, while heavier rains were expected in the north Thursday through Saturday, Meteorlogix said.

 

In Argentina, scattered showers were expected Wednesday while dry weather was seen Thursday through Saturday, Meteorlogix said.

 

At China's Dalian Commodity Exchange, soybean futures settled slightly higher on speculative buying, sources said. The benchmark September 2006 soybean contract settled RMB7 higher at RMB2,731 a metric tonne. The September 2006 soymeal contract rose RMB9 to settle at RMB2,348/tonne; while the September 2006 soyoil contract settled RMB7 lower at RMB5,252/tonne.

 

In Malaysia, crude palm oil futures on the Bursa Malaysia Derivatives ended mixed Tuesday with the benchmark May CPO contract settling at MYR1,472 a metric tonne, down MYR2 from Monday.

 

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