November 2, 2005

  

CBOT Soy Outlook on Wedneaday: Down 2-4 cents; private crop east, lacks support

 

 

Soybean futures on the Chicago Board of Trade are seen starting Wednesday's session moderately lower, pressured by bearish private production outlooks and the absence of fresh supportive inputs.

 

Analysts call soybeans to open 2 to 4 cents per bushel lower.

 

In overnight electronic trade, November soybeans were 4 cents lower at US$5.70 1/2 a bushel, January soybeans were 4 1/4 cents lower at US$5.82 1/4, December soymeal was US$1.00 lower at US$172.50 and December soyoil was 9 points lower at 22.93 cents per pound.

 

The inability of futures to find willing buyers once prices neared meaningful resistance levels Tuesday coupled with talk of rising production projections and a lagging export pace are expected to keep a defensive tone in the market, analysts said.

 

Tuesday's rally was seen as short covering in a bear market, with outlooks for a potential increase in the U.S. Department of Agriculture's ending stock forecast next week seen limiting near term price strength.

 

However, speculative traders will watch for signs of downside exhaustion, with the threat of Asian rust in Brazil and firming cash basis levels providing mild underlying support, said a CBOT trader.

 

Technical analyst Jim Wyckoff said a two-week-old downtrend line on the daily bar chart was negated Tuesday, but the bears still have the overall technical advantage. First resistance for January soybeans is seen at US$5.89 1/2 - Tuesday's high - and then at US$6.00. First support is seen at US$5.78 1/4 - Tuesday's low - and then at US$5.73 - this week's low.

 

FCStone released its Nov. 1 U.S. production estimates Tuesday, predicting the 2005-06 soybean crop at 3.064 billion bushels, with an average yield of 43.0 bushels an acre. In October, FCStone estimated a 3.105 billion bushel soybean crop with a yield of 43.0 bushels per acre, and the U.S. Department of Agriculture estimated a soybean crop of 2.967 billion based on a 41.6 bushel per acre yield.

 

Taiwan's Breakfast Soybean Procurement Association in Kaohsiung bought 57,000 metric tonnes of U.S. No. 2 soybeans from trading house Agrex in a tender concluded Wednesday, said a Taipei-based trader. The cargo is to be shipped Nov. 18-Dec. 2 from the U.S. Gulf.

 

A total of 693 delivery notices were posted against the November soybean contract, with a customer account at Man Financial the largest issuer at 144 lots. A customer account at Tenco stopped 485 lots and the house account at ADM Investor Services was a stopper of 108 lots. The last date assigned was October 27.

 

In news, Brazilian farm research institute, Embrapa Soja, reported Tuesday that soybean rust was found on a farm in Ituverava, located in northeastern Sao Paulo state. The crop found to have rust was planted in August, but more recently planted soy is roughly 1,000 meters away. Embrapa also confirmed that agrotoxins to prevent the fungus from forming on the leaves were applied to the plants before the rust appeared.

 

In overseas markets, soybean futures on the Dalian Commodity Exchange settled mixed Wednesday, amid a lack of follow-through buying following Tuesday's gains. The benchmark May 2006 soybean contract settled flat at RMB2,769 a metric tonne, after trading between RMB2,750 and RMB2,786/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended a tad lower Wednesday after another slow, range-bound day. The benchmark January CPO contract closed at MYR1,440 a metric tonne, down MYR5 from Monday, after moving in a narrow range of MYR1,439/tonne and MYR1,447/tonne. The market was closed Tuesday for Diwali, and will shut again Thursday and Friday for the Idul Fitri holidays.