December 6, 2006

 

CBOT Soy Outlook on Wednesday: Down 4-6 cents; e-CBOT, corrective action

 

 

Soybean futures on the Chicago Board of Trade are poised to start Wednesday's day session lower, in tune with overnight losses, as the market settles back into its corrective phase.

 

Soybean futures are called to open 4 to 6 cents lower.

 

In e-CBOT trade, January soybeans were 6 1/2 cents lower at US$6.57 3/4 and March was 6 1/4 cents lower at US$6.71 1/2 per bushel.

 

The influence of lower overnight prices, weakness in outside markets and the absence of fresh news to direct prices is expected to attract speculative profit taking, analysts said.

 

The lack of any follow-through buying from Tuesday's late recovery, bearish South American crop conditions and broad based commodity declines early Wednesday will set the tone, a CBOT floor trader said.

 

However, bullish longer term technical trends and demand outlooks are seen limiting declines, opening the door for choppy, two-sided action to arise on any sign of exhausted selling interest, he added.

 

A market technician said the next upside price objective for January soybeans is to close above solid resistance at US$6.75 3/4 a bushel, which is the top of a downside price gap on the daily bar chart created Monday. 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 this week's high of US$6.67 and then at US$6.70. First support is seen at US$6.60 and then at Tuesday's low of US$6.56 1/4.

 

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

 

The DTN Meteorlogix weather forecast said scattered showers will maintain mostly favorable conditions for developing crops across Argentine growing areas. Brazil's southern state of Rio Grande do Sul may be hotter and drier for a few days but soil moisture is adequate to surplus in this region. The balance of the region will benefit from scattered rains during a five-day period, Meteorlogix reports.

 

In deliveries, a total of 2,075 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 419 lots. The last trade date assigned was Dec. 5. Soymeal delivery notices totaled 975 lots. Issuers and stoppers were widely scattered. The last trade date assigned was Dec. 5.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Wednesday. Spot cash soybean bids were up 5 cents in Keokuk, Iowa, up 4 cents in Peoria, Ill., and up 6 cents at St. Louis, according to cash sources Wednesday.

 

In news, the National Commodities Supply Corp., or Conab, said Wednesday that Brazil's 2006-07 soybean crop should be a record 54.7 million metric tonnes, or roughly 1.3 million tonnes more than the 2005-06 crop, as stronger yields should lead to greater overall production. The official number is lower than private estimates made on Tuesday by agribusiness consulting group, AgRural, which put the crop as large as 58 million tonnes.

 

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