December 2, 2005

  

CBOT Soy Outlook on Friday: Steady to firmer, little farmer selling

  

 

Soy complex futures at the Chicago Board of Trade are called to open steady with a firmer tone Friday, based on little farmer selling, Thursday's firmer close and modest strength in overseas markets.

 

In e-cbot trade most-active January soybean futures fell 1/4 cent to US$5.59 1/2 a bushel. January soymeal rose US$1.50 a short tonne to US$174.00 and January soyoil was unchanged at 21.27 cents a pound.

 

"What's underpinning this market is the basis levels are remaining strong. The producer is a tight holder," said Don Roose, president, U.S. Commodities.

 

Farmers have been content to sit on the sidelines with supply if they have the storage, waiting for any price rallies to let go of soybeans. That's limiting downside pressure, analysts said.

 

Supporting soy complex futures is a general strength in overseas trade. Rotterdam soybean and soymeal prices were steady to firmer. European vegoils were also steady to firmer.

 

Short covering ahead of the weekend lifted crude palm oil futures on the Bursa Malaysia Derivatives, but sources there said gains were limited as underlying market sentiment remained weak amid concerns about poor exports. February rose MYR10 to MYR1,397 a tonne.

 

China's Dalian Commodity Exchange soybean futures rose Friday, as light buying emerged following no reports of new bird flu outbreaks since Thursday. May soybeans rose RMB10 to RMB2,546 a metric tonne. However, internal, domestic cash soybean prices continue to ease on bird flu concerns.

 

Roose said the bird flu concerns are a worry for soybeans, but it has moved to the back burner for the time being.

 

Ethiopia is investigating suspected cases of bird flu among pigeons found dead in the capital and the eastern Somali region, an official said Friday. Results are expected later next week, but Ethiopia needs proper testing kits before all examinations can be completed, he said.

 

In other news, the Brazilian Vegetable Oils Industry Association, Abiove keeps its estimate for the 2006-07 soy crop at 57.1 million metric tonnes.

 

Weather conditions for newly planted and developing soybeans are generally benign in South America. Private weather firm DTN Meteorlogix says soybean-growing areas of Mato Grosso and Mato Grosso do Sul, Brazil, saw mostly dry conditions or a few light showers since Thursday, with some scattered showers and thundershowers of 0.20-0.50 inch seen Friday. A similar forecast is on tap for the weekend.

 

In Parana and Rio Grande do Sul, Brazil, scattered to widely scattered light showers fell during the past 24 hours. For Friday and the weekend, mostly dry conditions are expected.

 

In Argentina's soybean-growing areas of Cordoba, Santa Fe and northern Buenos Aires, skies were clear since Thursday, with mostly dry conditions expected Friday and during the weekend.

 

U.S. Midwestern weather is expected to grow much colder in the coming days, which could increase soymeal usage among livestock producers, Roose said, and could underpin soymeal futures. "At this time of year we talk up higher consumption and the next five days we'll be in the freezer. It's more psychological, but we've talked about it since the 70's," he said.

 

Soyoil deliveries totaled 1,302 contracts, with Fimat the biggest issuer at 865 contracts and Bunge the biggest stopper at 571 contracts.