December 14, 2005

 

CBOT Soy Outlook on Wednesday: Down 2-3 cents, following e-CBOT theme

  

 

Soybean futures on the Chicago Board of Trade are seen starting Wednesday's session on weaker footing, in tune with overnight action amid ideas recent gains were a bit overdone.

 

Analysts call soybeans to open 2 to 3 cent per bushel lower. In overnight electronic trade, January soybeans were 2 1/4 cents lower at US$5.95 1/4, January soymeal was US$0.50 lower at US$193.50 and January soyoil was 3 points higher at 21.08 cents per pound.

 

A lower than expected crush figure coupled with an overall bearish fundamental makeup is expected to apply modest pressure to futures. Lower prices in outside inflationary markets, with energy and metal prices lower is seen taking some edge off prices, while the lower U.S. dollar adds strength.

 

Nevertheless, traders are keeping a close eye on speculative fund activity, as recent buying interest from the speculative sector has discounted market fundamentals, analysts said.

 

Supportive technical chart outlooks have the potential to attract buyers, traders added.

 

Market technicians said a close above this week's high of US$6.02 in the January contract would provide market bulls with solid upside technical power. First resistance for January soybeans is seen at US$6.02 and then at US$6.11--the October high. First support is seen at US$5.90 and then at US$5.82--this week's low.

 

Meanwhile, building concerns over dryness in South America is expected to keep a level of support in the market, while hedge related selling above the market limits upside potential.

 

The National Oilseed Processors Association monthly crush for November was 144.933 million bushels, below the average trade estimate at 147 million. The figure was below the range of estimates that span from 145.1 million to 148.0 million bushels. Soyoil stocks were pegged at 1.608 billion pounds, above the average trade estimate of 1.542 and above the range of estimates that span from 1.490 to 1.580 billion.

 

The DTN Meteorlogix Weather Service forecast said there is a chance for some showers to emerge in southern Brazil during this weekend but the best chance appears to be during the 6-10 day period. In Argentina, scattered thundershowers will be in the region during the next few days and a few more during the weekend, but long range charts suggest a higher chance for significant rainfall beginning on or about next Thursday, Meteorlogix said.

 

A total of 161 delivery notices were redelivered against the December soyoil contract, with the house accounts at Bunge Chicago and ADM Investor Services the primary stoppers of 45 and 90 lots respectively. The last date assigned was December 13.

 

Wednesday is the last trading day for December soymeal and soyoil contracts. The contracts expire at 12:00 CST.

 

Meanwhile, the Kaohsiung branch of Taiwan's Breakfast Soybean Procurement Association will seek 60,000 metric tonnes of U.S. soybeans in a buy tender Thursday, a Taipei-based trader said Wednesday.

 

In overseas markets, soybean futures on China's Dalian Commodity Exchange settled higher for a fourth consecutive trading day Wednesday, boosted by Tuesday's gains in Chicago Board of Trade soybean futures. The benchmark May 2006 soybean contract settled RMB35 higher at RMB2,678 a metric tonne, after trading between RMB2,663/tonne and RMB2,694/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended moderately lower Wednesday, with the benchmark contract falling below a key psychological level amid continued concerns about a supply glut. The benchmark February CPO contract ended at MYR1,397 a metric tonne, down MYR10 from Tuesday and below the MYR1,400 support level.

 

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