December 19, 2006

 

CBOT Soy Outlook on Tuesday: Flat up 1 cent; following overnight theme

 

 

Soybean futures on the Chicago Board of Trade are seen beginning Tuesday's day session steady to firmer, taking their lead from overnight indicators as futures attempt to stabilize following recent declines.

 

Soybean futures are called to open flat to 1-cent higher.

 

In e-CBOT trade, January soybeans were 3/4-cent higher at US$6.48 3/4 and March was 3/4-cent higher at US$6.63 3/4 per bushel.

 

A quiet news front is failing to provide any definitive direction to prices, with traders anticipating two-side action as the market continues to consolidate into holiday mode, analysts said.

 

Nevertheless, bearish technical momentum from Monday's slide below major moving average support coupled with bearish weather outlooks for South American crops is expected to keep pressure on prices, traders added. The influence of corn will help shape direction, with a mixed bag in outside markets failing to provide clear direction for the futures, a CBOT floor analyst said.

 

Meanwhile, underlying demand continues to keep a floor beneath prices, as traders remain encouraged by the market's ability to uncover export demand on price breaks, traders added.

 

U.S. Department of Agriculture said private exporters reported the sale of 110,000 metric tonnes of soybeans China for delivery in the 2006/2007 marketing year, the USDA said Tuesday.

 

A market technician said bullish momentum is fading as chart damage occurred on Monday's gap lower move. The next upside price objective for January soybeans is to close prices above solid resistance at US$6.70 a bushel. The next downside price objective is closing prices below solid support at US$6.25.

 

First resistance for January soybeans is seen at Monday's high of US$6.51 3/4 and then at US$6.54 1/4 - the top of Monday's downside price gap. First support is seen at Monday's low of US$6.43 and then at US$6.40.

 

The DTN Meteorlogix weather forecast said periodic rains will maintain soil moisture for Argentina's crops but there may be some flooding with this rain. In Brazil, increasing rain activity this week will help to ease stress to soybeans through the southern belt, Meteorlogix reports.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Tuesday. Spot cash soybean bids were up 1-cent in Keokuk, IA, down 2 cents in Peoria, Ill., and down 7 cents at St. Louis, according to cash sources Tuesday.

 

Rotterdam soybeans and soymeal were mostly lower. European vegoils were mostly lower.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly down Tuesday, pressured by Monday's fall in CBOT soybean futures, analysts said. The benchmark May 2007 contract settled RMB7 lower at RMB2,808 a metric tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly higher Tuesday, with the market struggling to establish a clear direction amid a slowdown in trading ahead of the year-end. The benchmark March CPO ended up MYR8 at MYR1,855 a metric tonne.