November 11, 2005

 

CBOT Soy Outlook on Friday: Firmer on overnight strength

 

 

Soy complex futures at the Chicago Board of Trade on Friday are seen starting firmer after strength in overnight trade and Thursday's rising trend.

 

Most-active January soybeans are called to open 1 to 3 cents firmer.

 

In overnight trade, January soybeans on e-cbot trade rose 1 3/4 cents a bushel to $5.89 1/4, while November gained 3/4 cent to $5.77 3/4. January soybeans rose in overnight trading after Thursday's move to session highs. Technical analyst Jim Wyckoff said bullish traders should be impressed with Thursday's price action after "the market absorbed a bearish U.S. Department of Agriculture report, including larger-than-expected carryout, but still only lost a penny. That is a clue that a near-term low is in place. Bulls would gain some more confidence with a weekly high close on Friday. The bears still have the overall technical advantage," Wyckoff said.

 

Analysts said the reaction to a higher carryout figure for soybeans in USDA's supply/demand report from Thursday was surprising. "Yesterday was one of the strangest days I've seen. It held only basic support, not even moving average support. I think it shows that funds are reluctant to get short beans and that's just as much a consideration for soybeans as the fundamentals. Still, I don't think that justifies January soybeans at $6, considering the report and Brazil's (production)," said John Kleist of John W Kleist Ag Consulting.

 

Wyckoff said if January soybeans can close over $6.11, the October high, it could mean a harvest low is in place. He puts first resistance for January soybeans at this week's high of $5.92, with further resistance at $6.00. First support is seen at Thursday's low of $5.78 and then at $5.73.

 

Modest support might come from market chatter that China purchased 10-12 cargoes of U.S. soybeans this week. "The rumor that they are buying beans is likely 100% true. But they've been buying beans every week. I don't mean to make light of it, but they are in every week," he said.

 

He added what's important to note is that if Chinese traders bought soybeans, they did so at lower levels. "They're pricing it cheaper, they're not buying rallies," he said.

 

In other news, November CBOT deliveries totaled 46 contracts. Term Commodities issued all 46, while Bunge Chicago Inc stopped 45. The Henning Carey/Lit Division of Refco stopped one.

 

Asian soybean rust was discovered for first time ever in Texas, on kudzu weeds in the southeastern corner of the state, representing the farthest west that the infectious plant disease has ever been seen in the continental U.S., USDA said late Thursday.

 

Private firm weather Meteorlogix said dry conditions or just isolated showers are expected in Brazil's Rio Grande do Sul and Parana states, with temperatures near to above normal. Dry conditions or just a few light showers are forecast for Mato Grosso with temperatures near normal.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended little changed Friday due to uncertainty over market direction and cautious sentiment ahead of the weekend. January ended at MYR1,436 a metric tonne, up MYR1.

 

China's Dalian Commodity Exchange soybean futures mostly rose, tracking a rising trend in U.S. soybean futures intraday Thursday. May gained RMB4 a metric tonne to RMB2,735/tonne.

 

European vegoils are mostly steady to firmer. Rotterdam soybean prices were weaker while soymeal prices were fimer.

 

Argentina's cash grain and oilseed prices ended lower Thursday after the USDA released a report forecasting higher-than-expected corn and soybean production and stocks in the U.S., traders there said.