Week Ahead : CBOT soybean complex likely to trade firm

Mumbai, Dec 5 (Commoditiescontrol) CBOT soybean complex witnessed mixed trend last week as soyoil prices plunged but positive mood is expected this week on Chinese demand, a trade analyst said. As per the analyst, soybean complex is likely to remain in positive territory this week.

The most active soybean contract at the Chicago Boar of Trade (CBOT) settled nearly flat on a weekly basis in the last trading session while it held a tad up on daily trading basis on Friday after a steep selloff the previous session related to disappointing U.S. biofuels targets. Soymeal prices gained over 4% while soyoil dropped nearly 10% on a weekly basis on Friday.

But, the trade analyst is of the views that drought in Argentina, and strong demand from China with easing COVID-19 induced restrictions, soybean complex may trade firm this week.

Meanwhile, crude oil prices has inched up in early trade after OPEC+ nations reaffirmed their oil output targets ahead of a European Union ban and price caps on Russian crude, which kick off on Monday.

At the same time, in a positive sign for fuel demand, more Chinese cities eased COVID-19 curbs over the weekend.

In Argentina, around 30% area is reportedly under drought, and no rain is expected this week.

The Commitment of Traders report showed managed money was 102,104 contracts net long in soybeans as of the 11/29 settle. That was a 20k contract increase through the week, mostly fueled by net new buying. Commercial soybean traders added 12k short hedges, with 4k fewer longs, for a net short of 144,388 contracts. Managed money firms were also net buyers in meal and soy oil through the week that ended 11/29.

StatsCan reported 2022/23 canola output at 18.174 MMT. That was down nearly 1 MMT from their prior report in Sep, where the low end of estimates was expecting a 500k MT cut. Last year’s crop was 13.757 MMT but was hindered by the drought, and 2020/21 was 19.48 MMT. Their soybean production is now forecasted at 6.543 MMT, mostly UNCH from Sept.

China is set to auction 500k MT of imported soybeans on 12/9. StoneX estimates the Brazilian soy crop 737k MT higher than previous estimates at 155 MMT. Private firm Datagro updated their estimate to 153.3 MMT for the 22/23 Brazilian bean crop.

CBOT January soybeans settled up 8-3/4 cents to $14.38-1/2 per bushel.

January soyoil lost 2.16 cents to settle at 65.22 cents per pound. CBOT January soymeal added $2.50 to $424.10 per short ton.

Traders said soybeans were consolidating after finding technical support just above Thursday's low of $14.25-1/4.

Prolonged drought in Argentina has left over a third of early planted soybeans in the country's core farming region in regular-to-poor condition, the Rosario grains exchange said late Thursday.