November 16, 2005

 

CBOT Soy Outlook on Wednesday: Down 1-2 cents; mirroring overnight theme

  

 

Soybean futures on the Chicago Board of Trade are seen starting Wednesday's session weaker, mirroring the overnight tone as the market continues to suffer from a lack of fresh supportive inputs, traders said.

 

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

 

In overnight electronic trade, January soybeans were 1 1/4 cent lower at US$5.91, December soymeal was US$0.40 lower at US$179.80 and December soyoil was unchanged at 22.34 cents per pound.

 

Bearish sentiment is the underlying theme of the market, with favorable South American weather conditions, bird flu worries, lagging export demand and a weak technical close Tuesday failing to attract aggressive buying, analysts said.

 

Nevertheless, traders anticipate futures will continue to hover within its recent trading range, with firm cash basis levels providing underlying support, while strong technical resistance resting above the market limits buying interest above the psychological US$6.00 per bushel level basis January futures.

 

The market needs a fundamental spark to break the sideways theme, but with export demand remaining routine and the lack of a weather threat in South America, market bulls are having trouble sustaining upward momentum, said a CBOT commission house broker.

 

On the technical side, first resistance for January soybeans is seen at US$6.01--Tuesday's high--and then at US$6.04-double top resistance, while first support is seen at US$5.91 1/2--Tuesday's low--and then at US$5.88, analysts said.

 

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

 

In Argentina, the outlook calls for mostly dry conditions Wednesday, with scattered showers and thunderstorms developing on Thursday and ending on Friday. Generally favorable conditions are seen for corn and soybean planting, Meteorlogix added.

 

In news, China's Ministry of Health on Wednesday confirmed the country's first three human cases of bird flu, the government announced. Two cases were confirmed in the provinces of Hunan in central China and one in Anhui in the east, the official Xinhua News Agency reported.

 

In overseas markets, China's Dalian Commodity Exchange soybean futures settled mostly lower Wednesday, consolidating around recent low levels after Chicago Board of Trade soybeans fell slightly Tuesday. The benchmark May 2006 soybean contract lost RMB9 to settle at RMB2,726 a metric tonne, after trading between RMB2,718 and RMB2,737/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Wednesday as concerns about slowing demand amid rising stocks continued to pressure the market. The February contract, which began trading as the benchmark, ended down MYR7 at MYR1,415 a metric tonne after moving between MYR1,410/tonne and MYR1,423/tonne.

 

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