December 5, 2006

 

CBOT Soy Outlook on Tuesday: Down 2-3 cents, continuing consolidation theme

 

 

Chicago Board of Trade soybean futures are seen starting Tuesday's day session with modest losses, taking its cue from overnight declines as futures continue to consolidate prior gains.

 

Soybean futures are called to open 2 to 3 cents lower.

 

In e-CBOT trade, January soybeans were 3 1/4 cents lower at US$6.56 and March was 2 1/2 cents lower at US$6.71 per bushel.

 

A quiet news front is providing little direction for prices, with end-of-the-year position squaring expected to extend the current price correction of the big fall rally, a CBOT floor analyst said.

 

A poor technical close Monday is expected to generate some price pressure, but with solid underlying demand and higher energy prices in early action, futures may find support to produce two-sided action following Monday's sharp declines, analysts added.

 

A technical analyst said Monday's declines produced no serious chart damage, but good follow-through selling on Tuesday would begin to worry market bulls about a near-term market top being in place. Upside momentum is still in technical control, with the next upside price objective is to close January futures above major psychological resistance at US$7.00 a bushel. The next downside price objective is closing prices below solid support at the mid-November "reaction low" of US$6.51 1/2.

 

First resistance for January soybeans is seen at Monday's high of US$6.67 and then at US$6.70. First support is seen at Monday's low of US$6.58 1/2 and then at US$6.51 1/2.

 

U.S. Department of Agriculture said private exporters reported the sale of 120,000 metric tonnes of U.S. soybeans to China for delivery in the 2006-07 marketing year.

 

The DTN Meteorlogix weather forecast said scattered showers will maintain mostly favorable conditions for developing crops in Argentina. Brazil's Rio Grande Do Sul area may be hotter and drier for a few days, but soil moisture is adequate to surplus in this region. The balance of the soy growing region benefits from scattered rains during the 5 day period.

 

In deliveries, a total of 2,424 delivery notices were posted against the December soyoil future. Issuers and stoppers ere widely scattered among various commission houses, with the house account at Term Commodities stopping of 254 lots. The last trade date assigned was Dec. 4. Soymeal delivery notices totaled 911 lots. Issuers and stoppers were widely scattered. The last trade date assigned was Dec. 4.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Tuesday. Spot cash soybean bids were up 11 cents in Peoria, Ill., and up 8 cents at St. Louis, according to cash sources Tuesday.

 

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

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Tuesday, pressured by Monday's losses in CBOT soybean futures, analysts said. The benchmark May 2007 contract settled RMB30 lower at RMB2,824 a metric tonne.

 

Meanwhile, soyoil prices in China dropped this week due to recent losses in CBOT soybean futures, as well as abundant supplies, local traders said Tuesday. Soyoil is made mainly by crushing imported soybeans in China. So CBOT losses weighed on domestic soyoil prices directly, said an official at China National Vegetable Oil Corp.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower for the third straight day Tuesday as the market, under pressure from weak soyoil and a strengthening ringgit, ignored projections of biodiesel growth. The benchmark February contract ended down MYR23 at MYR1,840 a metric tonne.