December 7, 2005

 

CBOT Soy Outlook on Wednesday: Flat down 2 cents; tracking e-CBOT action

  

 

Soybean futures on the Chicago Board of Trade are seen starting Wednesday's open auction session on weak footing, tracking overnight action, as bearish underlying fundamentals promote a defensive theme.

 

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

 

In overnight electronic trade, January soybeans were 3/4 cent lower at US$5.63 1/4, January soymeal was US$0.50 lower at US$174.30 and January soyoil was 5 points lower at 21.28 cents per pound.

 

A quiet news front in the face of a lagging export pace, expectations for rising ending stock forecasts and satisfactory planting and early crop development weather in South America combine to cast a defensive cloud over the market, analysts said.

 

Traders anticipate participants will begin to position themselves for potentially bearish export and ending stock forecasts from the U.S. Department of Agriculture on Friday.

 

The average of estimates from analysts surveyed by Dow Jones Newswires pegs the 2005-06 U.S. soybean carryout at 386 million bushels, from a range of 337 million to 450 million. The USDA is scheduled to release its latest carryout projections in its supply and demand report Friday at 8:30 a.m. EST.

 

However, the eventual direction of the market will depend on speculative activity, with the influence of higher energy and metals market possibly generating broad based price strength, said a CBOT commission house broker. Otherwise, traders anticipate some active spread trade, with index funds expected to roll January positions into March contracts, he added.

 

Market technicians said first resistance for January soybeans is seen at US$5.70 and then at US$5.75 1/2--this week's high. First support is seen at US$5.61 1/2--Tuesday's low--and then at US$5.55.

 

The DTN Meteorlogix Weather Service said drier conditions are on tap through southern crop areas of Brazil during the next 5-7 days, before some chance for showers emerge. In Argentina, no widespread shower activity is expected during the next 7 days. Long range charts suggest a pick up in shower activity later next week but this is somewhat uncertain, Meteorlogix added.

 

A total of 628 delivery notices were redelivered against the December soyoil contract, with issuers and stoppers scattered among various firms. The last date assigned was December 6.

 

Meanwhile, South Korea's Major Feedmill Group bought 37,000 metric tonnes of Indian soymeal in private negotiations late Tuesday with trading houses Noble and Adani, a Seoul-based trader said Wednesday.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Wednesday, tracking Tuesday's fall in Chicago Board of Trade soybeans. The benchmark May 2006 soybean contract lost RMB21 to settle at RMB2,555 a metric tonne, after trading between RMB2,545/tonne and RMB2,566/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended flat Wednesday after a largely choppy and uneventful day devoid of trading ideas. The benchmark February contract ended at MYR1,413 a metric tonne, unchanged from Tuesday.

 

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