December 20, 2005

 

CBOT Soy Outlook on Tuesday: Seen mixed; technicals drive prices

  

 

Soybean futures on the Chicago Board of Trade are seen starting Tuesday's session with a steady to mixed undertone, in tune with overnight action, as technicals are seen driving prices, analysts said

 

Analysts call soybeans to open steady to mixed.

 

In overnight electronic trade, March soybeans were 1/2 cent lower at US$6.20, March soymeal was US$0.10 higher at US$199.30 and March soyoil was 9 points higher at 22.00 cents per pound.

 

The absence of fresh fundamental news, talk of Monday's gains being a little overdone and wetter Argentine weather forecast should provide light pressure, but the direction of prices will hinge on technically related commodity fund activity once again, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

An improved technical picture following Monday's strong close is expected to provide strength to prices, with rumors of China securing cargoes of U.S. soybeans as bird flu worries subside is seen adding support as well.

 

However, technically overbought conditions and a pick up in farmer movement should limit upside movement, Roose added.

 

Technical analysts said Monday's price action produced a bullish upside breakout from the congestion area on the daily bar chart, with the next upside price objective for market bulls in March futures is the US$6.50 resistance level.

 

First resistance for March soybeans is seen at US$6.22 - Monday's high - and then at US$6.30. First support is seen at US$6.10 and then at US$6.05 - Monday's low.

 

Meanwhile, generally favorable conditions for planting and developing soybeans through the major growing areas of Argentina, DTN Meteorlogix said, with a chance for a few scattered thunderstorms this coming Friday. Otherwise dry conditions are expected during the seven-day period, with temperatures near to above normal Thursday, near to below normal Friday and Saturday.

 

In Brazil, the best chance for thundershowers during the next five days is from northern Parana northward but there is at least some chance further south. No significant upper level ridging at this time, although Rio Grande Do Sul and southwest Parana could use a little more rain, Meteorlogix said.

 

In overseas markets, soybean futures on China's Dalian Commodity Exchange settled higher Tuesday, continuing their recent surge, after Chicago Board of Trade soybeans rallied Monday. The benchmark May 2006 soybean contract settled RMB44 higher at RMB2,748 a metric tonne - the highest settlement price in over a month. It traded in a tight range between RMB2,738/tonne and RMB2,758/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended moderately higher after another range bound, subdued trading day Tuesday. The benchmark March CPO contract ended at MYR1,409 a metric tonne, up MYR4 from Monday after moving in an extremely narrow range. Rotterdam soybeans and soymeal prices were higher, European vegoils were mixed.