December 19, 2005

 

CBOT Soy Outlook on Monday: Up 5-7 cents; e-CBOT, outside market strength

 

  

Soybean futures on the Chicago Board of Trade are seen starting Monday's open auction session on firm footing, following the overnight theme, with carryover momentum from Friday, the influence of outside inflationary markets, and drier forecasts for Argentina supporting prices, traders said.

 

Analysts call soybeans to open 5 to 7 cents per bushel higher.

 

In overnight electronic trade, March soybeans were 7 cents higher at US$6.09 1/2, March soymeal was US$1.80 higher at US$193.50 and January soyoil was 12 points higher at 21.68 cents per pound.

 

Concerns over dryness in Argentina, higher energy and metals markets as well as overnight strength in Chinese soy futures markets should provide a spark to extend firm e-CBOT prices, said a CBOT commission broker.

 

Rumors of China picking up its buying interest with bird flu fears waning is expected to aide market strength, with technically inspired fund buying seen as the key factor that will determine how far upward momentum will carry prices.

 

Market technicians said a close in March futures above last week's high of US$6.11 would provide market bulls with fresh upside technical power, but said it's still possible that sideways and choppy trading conditions will continue in the near term.

 

First resistance for March soybeans is seen at US$6.11 - last week's high, and then at US$6.19 - the October high. First support is seen at US$5.99 1/2 - Friday's low - and then at US$5.91 - last week's low.

 

Market fundamentals are clearly weighted to the downside, but there is a general apprehension among many participants to press the short side of the market amid speculation that speculative commodity index fund long buying will emerge early in 2006, a CBOT trader added.

 

Meanwhile, DTN Meteorlogix Weather Service forecast said there is a chance for a few thunderstorms at times this week in Argentine growing areas, but it doesn't look as wet for this week as it did late last week.

 

In Brazil, shower activity during the weekend and early this week is seen maintaining favorable growing conditions, with only weak ridging indicated over northeast Brazil at this time.

 

The Commodity Futures Trading Commission said Friday in its commitments of traders report that large speculative traders held net short futures and options positions totaling 8,152 lots in soybeans, 27,754 contracts in soyoil while holding a net long position of 7,182 lots in soymeal as of Dec. 13.

 

On tap for Monday, the U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 10:00 a.m. CST (1600 GMT).

 

In overseas markets, soybean and soymeal futures on China's Dalian Commodity Exchange settled higher Monday on active follow-through buying, with trading in soymeal surging to an all-time high of nearly 1 million lots after setting a record Friday. The benchmark May 2006 soybean contract settled RMB26 higher at RMB2,704/tonne, after trading between RMB2,678/tonne and RMB2,722/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended marginally higher Monday after another uneventful trading day as year-end holidays and a lack of fresh market-moving news kept participants largely on the sidelines. The benchmark March CPO contract ended at MYR1,405 a metric tonne, up MYR4 from Friday.