October 26, 2005

  

CBOT Soy Outlook on Wednesday: Seen lower; in tune with e-CBOT

 

 

Soybean futures on the Chicago Board of Trade are seen starting Wednesday's session on weak footing, in tune with lower price action in the overnight session, with concern over the spread of bird flu aiding the lower theme, traders said.

 

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

 

In overnight electronic trade, November soybeans were 2 1/2 cents lower at US$5.75 1/2 a bushel, January soybeans were 2 1/2 cents lower at US$5.87 3/4, December soymeal was US$0.60 lower at US$170.30 and December soyoil was 11 points lower at 23.67 cents per pound.

 

The absence of fresh fundamental news in the market is expected to keep a sideways trading pattern intact, with bird flu worries and quiet export markets weighing on prices while the uncertainty surrounding the start of the planting season in Brazil limits downside momentum, analysts said.

 

A quiet news front has brought technical factors to the forefront of the market, as traders await new fundamental inputs to shift futures out of their recent trading range. Otherwise, spreading activity will remain a featured attraction, as participants attempt to roll and exit November positions ahead of first notice day Oct. 31.

 

Technical analyst Jim Wyckoff said market bears still have the overall technical advantage and the Asian bird flu scare is also keeping gains limited. A close above major psychological resistance at US$6.00 would provide the bulls with fresh upside technical momentum, while a close back below this week's low of US$5.66 1/2 would suggest a retest of the recent low, or below, he added.

 

First resistance for November soybeans is seen at US$5.82 - Tuesday's high - and then at US$5.88. First support is seen at US$5.75 - Tuesday's low - and then at US$5.70.

 

Meanwhile, China reported its third outbreak of bird flu in a week on Wednesday, as public health groups urged officials to bypass patent laws and mass-produce generic versions of potentially lifesaving anti-viral drugs. More than 500 chickens and ducks were killed by the latest outbreak Saturday in central China, which prompted authorities to destroy 2,487 others in an attempt to keep the disease from spreading, the government's veterinary bureau said in a report.

 

In overseas markets, soybean futures on the Dalian Commodity Exchange settled mostly lower Wednesday on further outbreaks of the H5N1 bird flu virus, negating the positive effect of a stronger close for Chicago Board of Trade soybeans. The benchmark May 2006 contract inched down RMB1 to settle at RMB2,745 a metric tonne, after trading between RMB2,737 and RMB2,755/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended marginally lower in extremely sluggish, range-bound trading Wednesday. The benchmark January CPO contract ended at MYR1,418 a metric tonne, down MYR3 from Tuesday.

 

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