November 9, 2005

 

CBOT Soy Outlook on Wednesday: Down 1-3 cents; positioning ahead of crop data

  

 

Soybean futures on the Chicago Board of Trade are seen starting Wednesday's session modestly lower, with activity expected to be geared toward the evening of positions heading into Thursday's U.S. Department of Agriculture crop report.

 

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

 

In overnight electronic trade, November soybeans were 2 1/4 cents lower at US$5.72 a bushel, January soybeans were 3 cents lower at US$5.82 1/2, December soymeal was US$0.20 lower at US$173.70 and December soyoil was 13 points lower at 22.68 cents per pound.

 

With supportive fundamental news limited, a general consensus among traders that crop estimates continue to grow coupled with fears of bird flu, bearish sentiment remains in place, said Don Roose, president U.S. Commodities in West Des Moines Iowa.

 

Analysts expect the government to report higher production and ending stock forecasts in Thursday's report.

 

The average of trade estimates for Thursday's USDA crop report from a survey of industry analysts by Dow Jones Newswires peg 2005 production at 3.016 billion bushels, up from USDA's October projection of 2.967 billion. The average guess among analysts in the survey pegged the 2005-06 carryout at 313 million bushels from a range of 270 million to 351 million. USDA in October estimated ending stocks at 260 million bushels.

 

Technical analyst Jim Wyckoff said despite prices closing near the session high Tuesday, market bears still have the overall technical advantage. It will take a close above the October high of US$6.11 to strongly suggest a harvest low is in place and that prices will trend at least sideways if not higher on the coming weeks, he added.

 

First resistance for January soybeans is seen at US$5.88-this week's high - and then at US$5.95. First support is seen at US$5.80 and then at US$5.75.

 

Otherwise, activity is expected to remain light in range bound price action heading into the crop report, as traders are unwilling to take on added risk as there remains room for surprises in the report, analysts said.

 

Meanwhile, a total of 37 delivery notices were posted against the November soybean contract, with a customer account at RJ O'Brien stopping 36 lots. The last date assigned was November 3.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Wednesday, mostly on long liquidation, as concerns over a further spread of bird flu in China intensified, analysts said. China has reported four bird flu outbreaks since October and Agriculture Minister Du Qinglin warned Tuesday that the disease could spread further. The benchmark May 2006 soybean contract gave up RMB20 to settle at RMB2,723 a metric tonne, after trading from RMB2,708-RMB2,747/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly lower Wednesday, with market sentiment cautious ahead of the release of key supply and demand data Thursday. The benchmark January CPO contract ended at MYR1,427 a metric tonne, down MYR6 from Tuesday, after moving in a tight MYR1,426-MYR1,441/tonne range.

 

Rotterdam soybeans and soymeal prices were mixed, and European vegoils were mixed.