December 28, 2005

 

CBOT Soy Outlook on Wednesday: Flat to lower, in tune with e-CBOT

 

 

Soybean futures at the Chicago Board of Trade are seen starting Wednesday's open auction session flat to lower, in tune with overnight action, with traders watching speculative interest in the absence of fresh fundamental news.

 

Analysts call soybeans to open flat to 2 cents per bushel lower.

 

In overnight electronic trade, March soybeans were 1 1/4 cents lower at US$6.22 1/2, March soymeal was US$1.70 lower at US$201.80 and March soyoil was 7 points higher at 21.35 cents per pound.

 

A minor setback from recent gains is seen generating some early selling pressure, but with a solid technical outlook and a strong close Tuesday, traders say prices could quickly turn around depending on what speculative funds want to do in thin holiday markets, analysts said.

 

Market technicians said the market's ability to a settle near the highs of the day Tuesday after an early sell-off is an encouraging technical sign for market bulls. For now, the sell-off can be viewed as a modest corrective retreat and the overall bullish technical tone has not been harmed.

 

The next major upside price objective for March soybeans is gap resistance at the US$6.44 1/4 to US$6.50 level, from August 12-15. Support lies at US$6.14 and then US$6.11, they added.

 

A quiet news front is not seen providing any definitive direction to prices in subdued trade, but floor sources said downside momentum should remain curtailed as traders remain cautious about pressing short positions amid expectations for fresh speculative index fund buying to surface early in 2006.

 

The overall fundamental picture remains bearish, but as long as speculative and technical buying underpins prices, futures will stay supported on breaks, said a CBOT commission house broker. Trade positioning ahead of Friday's first notice day for January futures is seen as a feature in otherwise quiet action.

 

Meanwhile, DTN Meteorlogix Weather Service said the chance for significant rain activity during a 5-7 day period in Brazil has shifted to Parana and possibly Mato Grosso Do Sul. Not as much for Rio Grande Do Sul but still enough to maintain favorable growing conditions.

 

In Argentina, no widespread thundershower activity is expected this week in soybean growing areas. Concerns for corn and soybean development will continue, as rain is needed to help ease worries, especially as temperatures trend warmer, Meteorlogix added.

 

In overseas markets, soybean futures on China's Dalian Commodity Exchange settled lower Wednesday on long liquidation, as well as short covering of the January contract, traders said. The benchmark May 2006 soybean contract settled RMB36 lower at RMB2,724 a metric tonne after trading between RMB2,703/tonne and RMB2,745/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended a tad lower Wednesday as the range bound, sluggish trading pattern of past days persisted. The benchmark March CPO contract hovered within a tight MYR8 band throughout the day before ending at MYR1,411/tonne, down MYR4 from Tuesday.

 

Rotterdam soybeans were mixed and soymeal prices were lower, European vegoils were flat to lower.