November 29, 2006

 

CBOT Soy Outlook on Wednesday: Down 6-8 cents; following overnight theme

 

 

Soybean futures on the Chicago Board of Trade are poised to open lower, in tune with the overnight theme as the absence of fresh news provides little incentive for aggressive buying, analysts said.

 

Soybean futures are called to open 6 to 8 cents lower.

 

In e-CBOT trade, January soybeans were 7 3/4 cents lower at US$6.78 1/2 and March was 7 1/4 cents lower at US$6.92 1/4 per bushel.

 

The absence of fresh supportive news to feed market bulls is expected to produce another round of profit taking, with lower opening calls in the neighboring grain futures aiding the lower tone, traders said. Underlying concerns surrounding reports of bird-flu in South Korea is seen as a slightly bearish feature.

 

The market is a bit overbought, and without some bullish incentives upside potential maybe limited, a CBOT floor analyst said. However, futures continue to find underlying support and any significant losses may attract buying interest as long as grain futures do not fall hard, he added.

 

A market technician said the next upside price objective for January soybeans is to close prices above major psychological resistance at US$7.00 a bushel. The next downside price objective is closing prices below solid support at US$6.50.

 

First resistance for January soybeans is seen at Tuesday's high of US$6.89 and then at the contract high of US$6.93. First support is seen at Tuesday's low of US$6.82 and then at US$6.80.

 

The DTN Meteorlogix Weather Service forecast said scattered showers will return to Argentina's crop belt during the last part of the week. Conditions favor early developing soybeans. In Brazil, increasing shower activity for the northern soybean belt will help to improve conditions for this part of the crop. No significant concerns elsewhere in the soybean belt at this time, Meteorlogix reports.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Wednesday. Spot cash soybean bids were down 2 cents in Sioux City, IA, up 4 cents in Peoria, Ill., and up 3 cents in St. Louis, according to cash sources Wednesday.

 

Rotterdam soybeans were mixed and soymeal were mostly flat. European vegoils were flat to lower.

 

Meanwhile, soyoil prices held firm on the spot market across China this week, due to stable demand and high prices of imported soybeans, local analysts said Wednesday.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Wednesday, pressured by outbreaks of bird flu in South Korea over the past week, analysts said. The benchmark May 2007 contract settled RMB27 lower at RMB2,920 a metric tonne, after trading between RMB2,888/tonne and RMB2,965/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended moderately lower Wednesday after yet another volatile trading day dominated by technically motivated activity. The benchmark February contract ended at MYR1,889 a metric tonne, down MYR9.