December 6, 2005

 

CBOT Soy Outlook on Tuesday: Down 1-2 cents; setback from Monday's rally

 

 

Chicago Board of Trade soybean futures are seen starting Tuesday's session weaker, in a small setback from Monday's rally, traders said.

 

Analysts call soybeans to open 1 to 2 cents per bushel lower.

 

In overnight electronic trade, January soybeans were 3/4 cent lower at US$5.72 1/2, January soymeal was US$0.20 lower at US$175.20 and January soyoil was 4 points higher at 21.95 cents per pound.

 

A quiet news front and ideas Monday's advances were a little overdone in the face of bearish underlying fundamentals are expected to temper upside momentum, unless speculative fund buying reemerges to extend the recovery from last week's lows, analysts said.

 

The lack of support from outside inflationary markets with energy and metals markets lower overnight is seen aiding the early pullback. However, firm cash basis levels, talk of increased feedings due to freezing U.S. Midwest conditions, and dry near term outlooks for Argentina are expected to provide light support to prices.

 

Market technicians said first resistance for January soybeans is seen at US$5.75 1/2--Monday's high--and then at US$5.80. First support is seen at US$5.69 and then at US$5.63 1/2--Monday's low.

 

The DTN Meteorlogix Weather Service said thunderstorms Monday and last night occurred in Brazilian crop areas with some very heavy rain producing some possible floods. In contrast, the next chance for scattered coverage of thundershowers in Argentina comes later this weekend or early next week.

 

Meanwhile, the Brazilian government estimated its soybean crop at between 57.3 million metric tonnes and 58.5 million. In October, the Brazilian government's soybean production estimates ranged between 56.9 million tonnes and 58.5 million tonnes. U.S. Department of Agriculture is scheduled to release its latest U.S. and world supply and demand projections Friday.

 

A total of 696 delivery notices were redelivered against the December soyoil contract, with issuers and stoppers scattered among various firms. The last date assigned was Dec. 5.

 

Meanwhile, the World Health Organization said Tuesday Asia would likely suffer more bird flu outbreaks and human infections in the coming weeks because the virus typically spreads the greatest in winter.

 

In overseas markets, China's Dalian Commodity Exchange soybean futures settled sharply higher Tuesday on fresh speculative buying, thanks to an overnight rise in Chicago Board of Trade soybeans. The benchmark May 2006 soybean contract rose RMB34 to settle at RMB2,576 a metric tonne, after trading between RMB2,561 and RMB2,584/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Tuesday as the market continued its rebound from recent steep declines amid renewed optimism about the demand outlook for 2006. The benchmark February CPO contract ended at MYR1,413 a metric tonne, up MYR11 from Monday, after moving between MYR1,403 and MYR1,416.

 

Rotterdam soybeans were higher and soymeal prices were mostly higher, and European vegoils were mixed.