December 16, 2003

 

 

CBOT Soy Outlook On Tuesday: Mixed Open Anticipated

 

Soybean futures at the Chicago Board of Trade are called to open mixed Tuesday with follow-through weakness from Monday cited and yet potential underlying support from anticipation of sales to China this week, sources said.

 

Prices could easily enter a two-sided trade amid a lack of fresh news, they added.

 

"We had kind of a weak close yesterday (Monday), and palm oil was a touch lower, same with China soybean futures. So I think we're going mixed to maybe a little easier," a CBOT floor trader said.

 

"But the China trade delegation is coming tomorrow (Wednesday) and it's Turnaround Tuesday," which could support prices, he noted.

 

The soybean-buying delegation from China is scheduled to arrive in Chicago on Wednesday with an announcement expected either Wednesday or Thursday. Some reports have suggested China may buy up to 1.5 million metric tons of U.S. soybeans to make up for a grain shortfall there this year.

 

A soybean sale for first-quarter 2004 delivery to China would likely have the most bullish impact on CBOT prices, one source said, though there are some people who think the transaction could be for delivery as late as fourth- quarter 2004.

 

Soybean futures at China's Dalian Commodity Exchange closed lower overnight on a short-term technical correction, after prices were viewed as rising too fast, reports said.

 

The most heavily traded May soybean contract closed CNY31 a ton lower to CNY3,293/ton ($1=CNY8.28).

 

In other news, wet weather in Brazil may have damaged soybeans there, Global Weather Services reported Tuesday. Southern areas of Brazil and Paraguay are seeing very heavy rains, adding to the heavy rain totals seen over the past few days.

 

A total of 2.50 to 8.50 inches of rain have fallen over areas in Paraguay and southern Brazil over the last 4 1/2 days, GWS said.

 

A warmer, drier weather pattern is expected develop in Argentina into the weekend, after showers Monday and Tuesday move out of the region. The main crop belt will then see another chance for rain on Sunday and Monday, GWS said.

 

Brazilian President Luiz Inacio Lula da Silva signed a bill Monday approving the planting and sale of genetically modified soybeans for 2003-04. The decree allows farmers to plant GMO soybeans for the first time as the government attempts to regulate the massive illegal plantings in southern Brazil, reports said.

 

Meanwhile, CBOT soy products also are expected to open mixed and could easily enter a two-sided trade depending on the direction soybeans pursue, traders said.

 

Malaysian crude palm oil futures closed lower on a lack of fresh bullish news that prompted traders to take profits, which is seen pressuring soyoil at the open.

 

The benchmark Mar crude palm oil contract on the Malaysia Derivatives Exchange ended at 1,787 ringgit ($1=MYR3.8) a ton, down MYR10 from Monday's close.

 

Indonesia's PT Astra Agro Lestari said that its crude palm oil sales should rise 17% to around 700,000 tons from nearly 600,000 tons estimated for 2003, amid an increase in consumption.