November 17, 2005

 

CBOT Soy Outlook on Thursday: Flat to down 1 cent; follow through from Wed

  

 

Soybean futures on the Chicago Board of Trade are seen starting Thursday's session with a steady to easier feel on light follow through selling from Wednesday's sharp declines, traders said.

 

Analysts call soybeans to open flat to 1 cent per bushel lower.

 

In overnight electronic trade, January soybeans were 1/4 cent lower at US$5.76 1/2, December soymeal was US$0.10 higher at US$173.50 and December soyoil was 1 point higher at 22.20 cents per pound.

 

The absence of supportive features is promoting a bearish theme in the market, with export sales continuing at a slow pace and favorable South American crop conditions keeping prices on the defensive, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Lingering fears of the spread of Avian Influenza (bird flu) in Asia and its impact of global feed demand is seen applying overhead resistance as well. The lack of confirmation of Wednesday's market talk of a much worse bird flu situation in China has managed to ease some concerns, but continues to keep the market on edge, added Roose.

 

However, a firm cash basis due to a lack of cash movement is expected to provide mild underlying support to futures.

 

Nevertheless, analysts say bearish technical momentum has regained its prominence, with the September low of US$5.65 1/2 basis January futures a potential near term objective.

 

First resistance for January soybeans is seen at US$5.85 and then at US$5.91, with first support is seen at US$5.74--Wednesday's low--and then at US$5.70, analysts said.

 

The USDA said Thursday that 2005-06 marketing year sales totaled 644,800 tonnes, with the primary buyer China at 345,500 tonnes. Pre-report estimates ranged from 500,000 to 700,000 tonnes.

 

Soymeal sales were 204,700 tonnes, a figure above estimates that ranged from 100,000 to 150,000 tonnes. Net sales of 900 tonnes were reported for soyoil. Trade guesses called for commitments in a range of 2,000 to 7,000 tonnes.

 

The DTN Meteorlogix weather forecast said more frequent chances for showers in northern Mato Grosso of Brazil during the next 7 days will improve conditions for soybeans which have been stressed by above normal temperatures and below normal rainfall. Favorable conditions for planting and developing soybeans are forecast for Parana and Rio Grande do Sul as well.

 

In Argentina, the outlook calls for scattered showers and thunderstorms, with dry conditions or just a few light showers Friday-Monday. Conditions are generally favorable for all crops, Meteorlogix said.

 

Meanwhile, China on Thursday reported two new outbreaks of bird flu in poultry hundreds of miles apart, both in regions that had previous outbreaks. China has now reported 13 outbreaks nationwide since Oct. 19. Two people have been confirmed to have died from bird flu. The latest outbreaks were in central China's Hubei province and the far northwestern region of Xinjiang, the government's official Xinhua News Agency said.

 

In overseas markets, China's Dalian Commodity Exchange soybean futures settled lower Thursday, in line with Wednesday's decline in Chicago Board of Trade soybeans. The benchmark May 2006 soybean contract fell RMB25 to settle at RMB2,701 a metric tonne after hitting RMB2,691/tonne, the lowest in more than eight months.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended mixed, with late short covering helping the benchmark contract recover from earlier losses fueled by concerns about slowing demand. The benchmark February CPO contract ended at MYR1,417 a metric tonne, up MYR2 from Wednesday. Other contracts mostly ended between MYR2 lower and MYR2 higher.

 

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