January 19, 2007

 

CBOT Soy Outlook on Friday: Seen flat-firm on sales, overnight trade

 

 

A firmer start is expected Friday for soybean futures at the Chicago Board of Trade following news of strong weekly export sales and modest overnight gains, but analysts aren't sure how long the opening strength will last.

 

Most-active March is called to open steady to 2 cents firmer.

 

In e-cbot trade, March corn gained 1/2 cent to US$7.16 3/4 a bushel.

 

Weekly export sales from the U.S. Department of Agriculture were much greater than the 400,000 to 800,000 metric tonnes expected. For the week ended Jan 11 - which is one day before USDA released its annual crop production report - soybean sales were 1.095 million tonnes, a 86% rise the week earlier and 62% gain over the prior 4-week average.

 

Buyers of size included China at 454,100 tonnes, which was the top buyer, followed by Germany, which bought 141,400 tonnes, including 120,000 MT switched from unknown destinations, Taiwan, which bought 108,400 tonnes, and Mexico which bought 105,400 tonnes.

 

These sales came before soybeans posted a strong rally after the USDA crop report. Since Jan. 11, March soybeans gained 42 cents.

 

Sales for soymeal were 221,200 tonnes and were two and one-fifth times the previous week and the prior 4-week average. Trade estimates ranged from 75,000 to 125,000 tonnes. Soyoil sales were 15,500 tonnes, at the top end of expectations of 5,000 to 15,000 tonnes.

 

Market watchers agree the export sales data is supportive to prices, but as Vic Lespinasse, floor broker for AG Edwards, pointed out, "frankly, the sales data don't have much staying power. We trade it for five minutes then forget about it," Lespinasse said.

 

As is the custom in soybeans, the market will watch the trade in the corn market. The direction the corn market takes will in part dictate soybean's movements.

 

The market also awaits possible planting intention estimates from private analytical firm Informa Economics, expected around 11:30 EST Friday. In mid-December, Informa estimated 2007-08 U.S. soybean acreage at 70.434 million acres, down 5.131 million from 2006.

 

"I'm not sure how much impact it will have, but we'll watch for it," a floor trader said.

 

A technical analyst said even though March soybean prices closed near a session low following the move to a fresh contract high of US$7.28 1/2, bulls are still in firm technical control and looking for more on the upside in the near term. Bulls need a close above the 2005 high of US$7.52 1/4, whereas bears need a close under US$7.00 to wrest control.

 

Weather in South America is generally benign. In Brazil, private weather firm DTN Meteorologix said the southern soybean-growing regions, including Rio Grande do Sul and Parana will see some rains Friday and Saturday, but skies are to clear Sunday, with temperature around normal. Northern Parana is dry by Monday.

 

In the center-west of Mato Grosso and Mato Grosso do Sul, partly cloudy skies are forecast, with a few isolated to widely scattered afternoon thundershowers seen during the next few days. Temperatures average near to above normal. By early next week thundershower activity may increase in coverage early next week through southern locations. Temperatures are to average near to above normal.

 

In other news, India's government said total oilseed planting is seen at 9.48 million hectares, down from 10.52 million hectares planted last year at this time. Rapeseed sowing will make up the bulk of that at covered 6.64 million hectares, down from 7.34 million hectares a year earlier. Indian farmers are more focused on planting wheat this year versus oilseeds.

 

Crude palm oil futures fell on the Bursa Malaysia Derivatives Friday, as supportive technical factors dissipated. April fell MYR30 to MYR1,875 a metric tonne. Losses in CBOT soyoil prices and weakness in crude oil lent pressure.

 

A weaker trade occurred for soybean futures traded on the Dalian Commodity Exchange. As it was for palm oil, soyoil and crude oil losses weighed on prices. September slid RMB58 to settle at RMB3,066 a metric tonne.

 

Rotterdam soybean and soymeal prices European vegoils were all mostly down.