April 4, 2006

 

CBOT Soy Outlook on Tuesday: Down 1-3 cents; e-CBOT, awaits supportive inputs

 

 

Soybean futures on the Chicago Board of Trade are seen starting Tuesday's session on the defensive, following the overnight theme as the market remains under the grip of bearish fundamental outlooks.

 

Analysts expect soybeans to open 1 to 3 cents per bushel lower.

 

In overnight electronic trade, May soybeans were 2 1/2 cents lower at $5.62 1/2, May soymeal was $1.30 lower at $171.80 and May soyoil was 4 points lower at 22.60 cents per pound.

 

The market is poised to continue its slow, deliberate decline to lower levels, as the lack of fresh supportive news and the absence of speculative fund buying fails to underpin prices, analysts said.

 

The market has few supportive features to encourage buying interest, but with good commercial buying beneath the market, a lack of cash movement and the potential for speculative buying to emerge on price breaks, downside movement is expected to remain as well, traders add.

 

Ample nearby supplies, record projected acreage for 2006 and the South American harvest moving along are not providing incentives for buyers to aggressively step up to push prices higher.

 

Market technicians said the market has gained solid downside technical momentum recently, with the next downside objective seen at the November low of $5.59 1/2. A close below that key support level is seen opening the door to a solid leg down in prices in the near term. It will take a close above chart resistance at last week's high of $5.89 to generate any fresh upside technical momentum.

 

First resistance for May soybeans is seen at $5.70 and then at $5.74 1/2--Monday's high--and then at $5.80. First support is seen at $5.64 1/2--Monday's low--and then at $5.59 1/2.

 

U.S. Midwest cash soybean basis bids were mostly unchanged Tuesday, cash dealers said.

 

DTN Meteorlogix Weather Service said the western U.S. Midwest would experience mainly dry conditions Tuesday and Wednesday, with a chance for showers and possible rain Thursday. Temperatures average near to above normal during this period.

 

In the eastern Midwest, mainly dry conditions are on tap for Tuesday and early Wednesday. Light rain or showers are seen developing in the Delta later Wednesday or Wednesday night, with a chance for light to moderate rain, 0.25-1.00 inch, during Thursday. Temperatures are seen average to below normal Tuesday, near to below normal Wednesday, and above normal Thursday across the western belt.

 

In Brazil, scattered showers and thundershowers in northern Mato Grosso may lead to harvest delays. There are no significant concerns for the harvest elsewhere in the region. Soil moisture should favor any late filling soybeans and second-crop corn, Meteorlogix said.

 

Rotterdam soybeans were lower and soymeal prices were mostly lower, and European vegoils were mostly lower.

 

In overseas markets, soybean futures on China's Dalian Commodity Exchange settled lower Tuesday,with most contracts touching their lowest points since early December on overnight losses in soybean futures on the Chicago Board of Trade, said analysts. The benchmark September 2006 soybean contract settled RMB22 lower at RMB2,635 a metric tonne, after stumbling to a four-month low of RMB2,628/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly higher Tuesday as short covering and talk of improved exports in April helped the market rebound from recent steep losses. The benchmark June CPO contract ended at MYR1,427 a metric tonne, up MYR6 from Monday.