April 21, 2006

 

CBOT Soy Outlook on Friday: Down on follow through, bearish sentiment

 

 

Traders and analysts expect Chicago Board of Trade soybean futures to open 2 cents to 3 cents a bushel lower Friday on a weak overnight session, follow through from recent lower prices and on overall bearish sentiment.

 

In overnight e-cbot trade, May soybeans were down 3 1/4 cents at US$5.68 and July was 3 3/4 cents lower at US$5.81 1/2.

 

Soybeans are being led down by weak Chinese prices overnight, lower crude palm oil and a general bearish attitude in the market just ahead of the U.S. planting season, sources said.

 

China's soybean futures settled lower Friday following losses on the CBOT. Investors were also seen retreating from soybean futures on ideas that the sector will not be able to fully recover from bird flu in one or two months, an analyst said.

 

The September contract on China's Dalian Commodity Exchange fell RMB23 at RMB2,580 a metric tonne.

 

Crude palm oil on the Bursa Malaysia Derivatives exchange fell on profit-taking after recent gains. The July contract was down MYR8 at MYR1,471 a metric tonne.

 

Traders were a bit cautious in the market ahead of a Globoil conference this weekend in Dubai.

 

CBOT soybeans are seeing a "choppy, volatile, look-over-your-shoulder-type trade," said independent analyst John Kleist.

 

Soyoil has been leading the complex with the acute interest in biofuels and has been the only segment that has traded above its major moving averages this week, he said.

 

"Meal ran to theirs (moving averages) but failed, and beans didn't even really get close," said Kleist.

 

Traders are also watching the outside markets for potential speculative influence in the CBOT agricultural pits. Gold and silver futures are higher in early trade. Crude oil futures look to open lower based on electronic trade being down 64 cents a barrel, basis June futures.

 

Meanwhile, showers in the Ohio Valley the first half of next week will continue to add to soil-moisture reserves in eastern areas of the Midwest, while recent wet weather in the western Midwest will cause fieldwork delays, DTN Meteorlogix said. Drier weather next week in the west, however, will improve conditions for planting and seedbed preparation.

 

 

Soy products

 

The product markets are seen opening steady to weak following the e-cbot session and an expected weaker soybean open. In overnight trade, July soymeal was unchanged at US$172.80 a short tonne and July soyoil fell 13 points to 24.39 cents a pound.

 

Soymeal was lower in China overnight on ideas that demand will not improve in the near term amid bird flu. China announced its 12th human death from avian flu on Friday.

 

September meal on the Dalian exchange fell RMB24 to settle at RMB2,189 a tonne.

 

Traders will closely watch the soyoil market, after prices jumped to nearly six-week highs Thursday on speculative interest and the funds' huge appetite for alternative fuels such as biodiesel, particularly as crude oil futures hit new highs.

 

Soyoil futures on China's Dalian exchange closed mixed, with the September contract down RMB22 at RMB5,065 a tonne.