February 28, 2006

 

CBOT Soy Outlook on Tuesday: Mixed, big deliveries vs. corn, wheat

 

 

Soybean futures at the Chicago Board of Trade were called to open mixed Tuesday as pressure from heavy deliveries amid a well-supplied U.S. cash soybean market could be offset by support from possible index fund buying in neighboring corn and wheat, brokers said.

 

Lingering concerns about a slowdown in global soy demand due to the spread of a deadly strain of bird flu could also figure in the mix, they noted.

 

Veterinary officials in Paris said Tuesday that no country should consider itself safe from the lethal H5N1 strain of bird flu and that it's "highly likely" that the disease will continue its spread in poultry stocks in Europe and beyond.

 

There were 2,771 deliveries posted on Tuesday's first notice day against CBOT March soybeans without major stoppers, matching traders' estimates.

 

There were 2,076 deliveries posted against CBOT March soyoil and zero soymeal deliveries.

 

"Deliveries were big and there were no good stoppers," said Don Roose, of U.S. Commodities. "I think it tells you what the tone in the cash market is - it's weak and there are an abundance of supplies here."

 

However, he noted possible speculative-led gains in corn and wheat could temper that bearish input.

 

"There's a new fund getting started here again that will be traded on a London exchange" Roose said. "It's supposed to be based on the GSCI. Some people thought we had maybe some buying (in CBOT grains) for that yesterday."

 

Barclays Capital recently announced it would introduce a new managed collateralized commodity obligation (CCO), or a note that pays coupons. Barclays said on Feb. 23 that there would be a press announcement forthcoming.

 

In overnight screen trade, the e-cbot May soybean contract settled down 1/2 cent at US$5.96 1/2 a bushel. May soymeal ended down US$1.30 a short tonne at US$177.10, and May soyoil closed up 0.03 cent at 23.40 cents a pound.

 

A close below Monday's US$5.81 in CBOT may soybeans would provide the bears with some fresh downside technical momentum, said a technical trader. A close above psychological resistance at US$6.00 would provide the bulls with better upside technical momentum.

 

First resistance for CBOT May soybeans was seen at US$5.94--Monday's high--and then at US$6.00. First support was seen at US$5.90 and then at US$5.83.

 

U.S. Midwest cash soybean basis bids were mixed Tuesday, cash dealers said. Spot cash soybean bids were down 5 cents in St. Louis, flat in Sioux City, Iowa, and down 3 cents in Louisville, Ken., they noted.

 

In Brazil, scattered rains were expected across the soy growing areas of Mato Grosso and Mato Grosso Do Sul Tuesday and then Thursday through Saturday, according to Meteorlogix weather service.

 

In Argentina, scattered showers were forecast across Cordoba, Santa Fe and Northern Buenos Aires through Thursday, Meteorlogix said.

 

At China's Dalian Commodity Exchange, soybean futures settled higher Tuesday following CBOT gains, traders said.

 

The benchmark September 2006 soybean contract settled RMB7 higher at RMB2,717 a metric tonne; September 2006 soymeal contract rose RMB10 to settle at RMB2,338/tonne; and September 2006 soyoil contract settled RMB36 higher at RMB5,193/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended weak Tuesday after a choppy trading day, with slightly disappointing export figures halting a market rally, traders said. The benchmark May CPO contract ended at MYR1,507 a metric tonne, down MYR3 from Monday after moving between MYR1,503 and MYR1,518.

 

In Rotterdam, spot soybean prices were firm and soymeal prices were flat to firm, cash sources said.