November 18, 2005

 

CBOT Soy Outlook on Friday: Down 2-4 cents; following overnight theme

  

 

Soybean futures on the Chicago Board of Trade are seen starting Friday's session on the defensive, following the overnight theme, as the absence of fresh fundamental support continues to keep bearish sentiment filtering through the market, traders said.

 

Analysts call soybeans to open 2 to 4 cents per bushel lower.

 

In overnight electronic trade, January soybeans were 4 3/4 cents lower at US$5.74 1/2, December soymeal was US$1.60 lower at US$173.20 and December soyoil was 6 points lower at 22.10 cents per pound.

 

Beneficial rains in Argentine growing areas, lingering fears of the impact of bird flu in Asia and a weak fundamental outlook should keep pressure on prices, said a CBOT commission house broker.

 

However, traders anticipate prices will remain within the parameters of the market's recent trading range, as futures have had trouble finding willing buyers above the US$6.00 level and a lack of aggressive selling below US$5.75 basis the January future.

 

Nevertheless, analysts say with little fresh supportive inputs aside from a firm cash basis, the market remains vulnerable to renewed technical selling.

 

Analysts see first resistance for January soybeans at US$5.85 and then at US$5.91. First support is seen at US$5.73 1/2 - Thursday's low - and then at US$5.70.

 

The DTN Meteorlogix weather forecasts said scattered showers and occasional thunderstorms were observed in Argentine soybean growing regions Thursday, and a few passing showers and thundershowers are expected to today.

 

In Brazil, more frequent chances for showers in northern Mato Grosso 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 in Parana and Rio Grande do Sul.

 

Meanwhile, China on Friday confirmed two new outbreaks of bird flu in poultry, bringing to 15 the number of cases reported nationwide since Oct. 19. The latest outbreaks were hundreds of miles apart - in the northern province of Shanxi and the far northwestern region of Xinjiang, the government's Xinhua News Agency said.

 

In overseas markets, China's Dalian Commodity Exchange soybean futures settled lower for a fourth consecutive trading day Friday, dragged down by a mix of short selling and long liquidation amid persistent worries over bird flu. The benchmark May 2006 soybean contract had fallen RMB19 to settle at RMB2,682/tonne after hitting RMB2,663/tonne, its lowest level in more than eight months.

 

Crude palm oil futures ended marginally higher Friday, with short covering emerging ahead of the weekend to help cushion downward pressure from lingering concerns about slow demand. The benchmark February contract ended at MYR1,418 a metric tonne, up MYR1 from Thursday. The contract moved between a low of MYR1,409 and a high of MYR1,420/tonne.

 

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