December 22, 2005

 

CBOT Soy Outlook on Thusday: Up 6-8 cents; following e-CBOT theme

  

 

Soybean futures on the Chicago Board of Trade are expected to start Thursday's session on firm footing, following the overnight theme, amid follow through technical momentum and lingering concerns over dry conditions in Argentina.

 

Analysts call soybeans to open 6 to 8 cents per bushel higher.

 

In overnight electronic trade, March soybeans were 7 cents higher at US$6.26, March soymeal was US$1.80 higher at US$203.00 and March soyoil was 45 points higher at 22.00 cents per pound.

 

The combination of momentum from Wednesday's late session reversal, increasing concerns about a dry weather pattern that has formed in Argentina's soybean belt and the influence of higher inflationary markets is seen supporting prices, said a CBOT commission house broker.

 

The market remains in the hands of technical factors, as speculative commodity funds have shown a willingness to absorb hedge pressure as well as add risk premium tied to weather conditions in Argentina. Market technicians said Wednesday's strong close near the session high showed market bulls' resilience and technical momentum.

 

First resistance for March soybeans is seen at US$6.27 1/2--this week's high--and then at US$6.30. First support is seen at US$6.09--Wednesday's low--and then at US$6.05--this week's low.

 

Nevertheless, bearish underlying fundamentals are expected to eventually cap upside potential, with trade positioning in the last full trading session ahead of the Christmas holiday weekend potential setting the stage for volatile action, as traders look for signs of upside exhaustion, analysts added.

 

CBOT grain and oilseed markets close at 12:00 CST Friday and will be closed Monday in observance of the Christmas holiday.

 

Meanwhile, DTN Meteorlogix Weather Service said Argentine growing areas have a chance for a few scattered showers Thursday into Friday, otherwise dry conditions are seen for a 7 day period. In Brazil, scattered showers and possible thundershowers are expected late Friday or during Saturday. Overall this still looks to be a drier than normal period for the southern and central crop belt, Meteorlogix added.

 

U.S. Department of Agriculture said Thursday that 2005-06 marketing year sales totaled 829,800 tonnes. The primary buyer was China at 295,000 tonnes. Pre-report estimates ranged from 500,000 to 700,000 tonnes.

 

Soymeal sales were 84,100 tonnes, a figure below the range from 100,000 to 150,000 tonnes. Net sales of 400 tonnes were reported for soyoil. Trade guesses called for commitments in a range of 10,000 to 20,000 tonnes.

 

The U.S. Census Bureau's crush report said 151.5 million bushels were crushed in November, in line with the average trade estimate of 151.9 million bushels. Soyoil stocks were seen at 1.901 billion pounds, below the average estimate of 1.989 billion pounds as well as the low end of the range. The yield on soyoil was 11.60 pounds per bushel. Soymeal stocks were 305,238 short tonnes, below the average trade estimate of 337,000 tonnes.

 

In overseas markets, soybean futures on China's Dalian Commodity Exchange settled higher Thursday, recouping Tuesday's losses as Chicago Board of Trade soybeans ended up Wednesday and maintained an upbeat tone during Asian trading hours. The benchmark settled RMB36 higher at RMB2,756 a metric tonne, after trading in a tight band of RMB2,744-RMB2,765/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended moderately higher Thursday after another range-bound day as market participants remained cautious ahead of the year-end holidays. The benchmark March CPO contract ended at MYR1,411 a metric tonne, up MYR5, or 0.4%, from Wednesday. Rotterdam soybeans were flat and soymeal prices were higher, European vegoils were mostly higher.