November 25, 2005

  

CBOT Soy Outlook on Friday: Down 1-3 cents on follow through selling

 

 

Soybean futures on the Chicago Board of Trade are poised to resume Wednesday's technical sell off on Friday, with bearish underlying fundamentals cementing the lower theme, traders said.

 

Analysts call soybeans to open 1 to 3 cents per bushel lower.

 

In overnight electronic trade, January soybeans were 2 1/2 cents lower at US$5.59 1/2, December soymeal was US$0.60 lower at US$170.10 and December soyoil was unchanged at 21.63 cents per pound.

 

The combination of technical weakness, lackluster export sales, favorable weather outlooks for South American crops and bird flu worries are seen generating follow through selling pressure to begin the day, analysts said.

 

The lack of supportive features to underpin prices, with the absence of Chinese buying in the weekly sales report dropping commitments well below the range of trade estimates is expected to increase selling pressure. However, while the trade is anticipating a continuation of bearish momentum, participants are expected to keep an eye out for a potential late session bounce as traders book a few profits at week's end, with thin holiday volume opening the door for erratic price swings.

 

Market technicians said first resistance for January soybeans is seen at US$5.65 1/2 and then at US$5.71 1/4 - Wednesday's high. First support is seen at US$5.60 and then at US$5.55.

 

CBOT grain and oilseed markets close at 12:00 p.m. CST Friday.

 

The USDA said Friday that 2005-06 marketing year sales totaled 219,500 tonnes, a marketing year low. The primary buyer was the Netherlands at 100,800 tonnes. Pre-report estimates ranged from 500,000 to 700,000 tonnes.

 

Soymeal sales were 145,500 tonnes, a figure within estimates that ranged from 75,000 to 125,000 tonnes. Net sales of 11,600 tonnes were reported for soyoil. Trade guesses called for commitments in a range of 4,000 to 9,000 tonnes.

 

The DTN Meteorlogix Weather Service said recent rain activity will maintain favorable conditions for early developing crops in Brazil, with precipitation in Argentina favorable for crops as well, except in the far southwest where it may be a little too dry.

 

Seoul-based Korea Feed Association bought 110,000 metric tonnes of South American soymeal from trading house Glencore Thursday, said a Seoul-based trader Friday. KFA Seoul bought two 55,000-tonne cargoes of South American soymeal to be shipped April 25 and May 20 to the port of Incheon, respectively.

 

Meanwhile, bird flu has been found in chickens throughout the Indonesian capital, the agricultural minister said Friday as authorities slaughtered some 400 fowl close to the home of a young girl who died of the disease. In addition, Bird flu outbreaks have continued to spread in Vietnam, while a man suspected of being infected with the virus fled a hospital quarantine unit, state-controlled media reported Friday.

 

In overseas markets, China's Dalian Commodity Exchange soybean futures settled lower Friday, as some speculators liquidated their long positions ahead of the weekend while mild fresh short-selling emerged amid frequent outbreaks of bird flu virus. The benchmark May 2006 soybean contract fell RMB9 to settle at RMB2,609 a metric tonne, after reaching a nine-month low of RMB2,598/tonne. Its intraday high was at RMB2,618/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Friday, boosted by late speculative buying after a mostly range-bound, sluggish trading day. The benchmark February contact ended at MYR1,419 a metric tonne, up MYR7 from Thursday after moving between MYR1,421 and MYR1,410.

 

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