November 15, 2005

 

CBOT Soy Outlook on Tuesday: Up 1-2 cents; in tune with e-CBOT theme

  

 

Soybean futures on the Chicago Board of Trade are seen starting Tuesday's session on slightly firmer footing, mirroring the overnight theme as the market continues to hover within a trading range, analysts said.

 

Analysts call soybeans to open 1 to 2 cents per bushel higher.

 

In overnight electronic trade, January soybeans were 1 cent higher at US$5.96, December soymeal was US$0.20 lower at US$180.00 and December soyoil was 5 points higher at 22.56 cents per pound.

 

The absence of fresh fundamental news has put the market in a holding pattern, with tight producer holding providing post harvest support and lingering uncertainty over South American crop potential keeping a light premium in prices, said Jason Roose, analyst with U.S. Commodities in West Des Moines, Iowa.

 

However, traders don't anticipate any strong rallies unless speculative funds become aggressive buyers, with bearish fundamentals amid ample supplies, bird flu concerns and a lagging export pace limiting upside potential.

 

Strong technical resistance resting above the market is seen as a hindrance to upside potential as well, while seasonal buying and the unwillingness of speculative funds to take on a short position in the market provides support on price breaks, analysts added.

 

Technical analyst Jim Wyckoff said futures have absorbed a bearish U.S. Department of Agriculture report last week, but failed to sell off. That is a clue that a near-term low is in place, and market bulls would gain some more confidence with a close above the October high of US$6.11, he added.

 

First resistance for January soybeans is seen at US$6.04 - Monday's high - and then at US$6.11. First support is seen at US$5.93 - Monday's low - and then at US$5.88.

 

The DTN Meteorlogix weather forecast said dry weather favors planting in the southern Brazilian growing areas but is unfavorable in the north. The northern areas will remain unfavorably dry for the next few days, while scattered showers are expected to increase later this week into next week.

 

In Argentina, the outlook calls for dry conditions or just a few light showers in the central grain belt during the next 48 hours. Scattered showers and thunderstorms will develop on Thursday, with the heaviest activity favoring the corn and soybean areas, Meteorlogix said.

 

The Commodity Futures Trading Commission said Monday in its commitments of traders report that large speculative traders held net long futures and options positions totaling 5,945 lots in soybeans and 11,649 contracts in soyoil as of Nov. 8. Large speculative traders were reported net short combined futures and options positions totaling 5,276 lots in soymeal.

 

Meanwhile, a total of 229 delivery notices were posted against the November soybean contract, with a customer account at RJ O'Brien the primary issuer of 165 lots. The principle stoppers were a customer account at RJ O'Brien with 204 lots and the house account at ADM Investor Services at 20 lots. The last date assigned was Nov. 14.

 

In overseas markets, China's Dalian Commodity Exchange soybean futures settled lower in subdued trading Tuesday, tracking Monday's fall in Chicago Board of Trade soybeans. The benchmark May 2006 soybean contract surrendered its gains achieved Monday, falling RMB15 to settle at RMB2,735 a metric tonne, after trading in a narrow range of RMB2,727 and RMB2,743/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended moderately lower Tuesday as the market remained trapped in a narrow range, despite estimates showing an improvement in exports in the Nov. 1-15 period. The benchmark January CPO contract ended at MYR1,422 a metric tonne, down MYR7 from Monday.

 

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