November 1, 2005

 

CBOT Soy Outlook on Tuesday: Up 2-3 cents; following e-CBOT trend

  

 

Soybean futures on the Chicago Board of Trade are seen starting Tuesday's session on firmer footing, following the overnight theme, as traders look for a modest bounce from the market's two-week descent.

 

Analysts call soybeans to open 2 to 3 cents per bushel higher.

 

In overnight electronic trade, November soybeans were 2 3/4 cents higher at US$5.67 1/2 a bushel, January soybeans were 3 1/4 cents higher at US$5.79 1/4, December soymeal was US$0.50 higher at US$170.20 and December soyoil was 19 points higher at 23.05 cents per pound.

 

The market is overdue for a bounce, with supportive seasonal buying patterns, signs of increasing export demand and firming cash basis levels providing underlying strength, said a CBOT commission house broker.

 

Overnight price strength in Asian markets coupled with rumors of China sniffing around for soybean supplies is seen aiding early price strength.

 

However, the absence of fresh news to sustain bullish enthusiasm is expected to limit upside potential and keep a choppy tone in place as participants gear up for next week's crop production report.

 

Private crop estimates are expected to begin filtering into the market, with FCStone expected to release their November projections after the close, traders said.

 

Technical analyst Jim Wyckoff said a two-week-old downtrend line is in place on the daily bar chart for January futures. A close above major psychological resistance at US$6.00 would provide market bulls with some fresh upside technical momentum, but a close back below the September low of US$5.65 1/2 would suggest another solid leg down in prices in the near term, he added.

 

First resistance for January soybeans is seen at US$5.75 and then at US$5.80. First support is seen at US$5.73 - Monday's low - and then at US$5.70.

 

Meanwhile, harvest activity is wrapping with the U.S. Department of Agriculture reporting late Monday 92% of the U.S. soybean crop had been harvested as of Sunday. The harvest figure compares to last year's 83% and the five-year average of 86%. The harvest pace was in line with trade estimates that ranged from 90% to 94% complete.

 

A total of 1,151 delivery notices were posted against the November soybean contract, with a customer account at RJ O'Brien issuing 481 lots, and the house account at Term Commodities the primary stopper of all 407 lots. The last date assigned was October 24.

 

In overseas markets, soybean futures on the Dalian Commodity Exchange settled higher Tuesday on a mix of short covering in near-month contracts and long buying in forward-month contracts. The benchmark May 2006 soybean contract rose RMB31 to settle at RMB2,769/tonne, after trading between RMB2,738/tonne and RMB2,782/tonne.

 

Markets in Malaysia, will be closed Tuesday, Thursday and Friday for religious festivals.

 

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