December 29, 2005

 

CBOT Soy Outlook on Thursday: down 1-2 cents; in step with e-CBOT trend

  

 

Traders at the Chicago Board of Trade anticipate a lower opening for soybean futures Thursday, extending the overnight trend, as the market consolidates amid the absence of fresh fundamental news to direct prices.

 

Analysts call soybeans to open 1 to 2 cents per bushel lower.

 

In overnight electronic trade, March soybeans were 1 1/4 cent lower at US$6.21, March soymeal was US$0.30 higher at US$202.90 and March soyoil was 15 points lower at 21.07 cents per pound.

 

The absence of new supportive inputs to underpin the market has left futures vulnerable to corrective type price action, but with underlying speculative support and traders remaining cautious about pressing short positions amid expectations for fresh speculative index fund buying to surface early in 2006, short-term downside movement seems limited, analysts said.

 

Thursday is the last full trading day of 2005, with activity seen subdued as participants attempt to avoid taking on added risk heading toward a long holiday weekend. CBOT grain and oilseed markets close at 12:00 CST Friday and will be closed Monday in observance of the New Years Day holiday.

 

Technical analysts said the market has moved into a short-term sideways consolidative type of mode. Short-term resistance is seen at US$6.29 and support comes in the US$6.19-US$6.14 range basis the March future. A minor bottom has formed on the daily chart off the November 28 low and the near and medium term technical trend has turned positive, but the bullish momentum has stalled and the market is vulnerable to a corrective pullback, they added.

 

Nevertheless, the fundamental picture of the market remains bearish, but lingering concerns over dryness in Argentina has managed to provide support 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 scattered thundershowers expected in Brazil's Rio Grande Do Sul today and Friday will maintain favorable growing conditions, however after that it looks drier and then hotter. No significant concerns from Parana northward, Meteorlogix added.

 

In Argentina, no widespread thundershower activity is expected during the next 7 days. There is a chance for hot temperatures, highs approaching 100 degrees Fahrenheit (38C), next week, as concerns for soybean development will continue, Meteorlogix said.

 

In overseas markets, soybean futures on China's Dalian Commodity Exchange settled mixed Thursday in quiet range-bound trading, analysts said. The benchmark May 2006 soybean contract settled RMB4 lower at RMB2,720 a metric tonne after trading between RMB2,708/tonne and RMB2,730/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended moderately higher Thursday after another range bound, dull trading day. The benchmark March CPO contract remained well within the range of past days, closing at MYR1,415/tonne, up MYR4 from Wednesday.

 

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