January 20, 2006

 

CBOT Soy Outlook on Friday: Up 2-3 cents, export sales, technical factors

  

 

Soybean futures at the Chicago Board of Trade are seen starting Friday's open auction session higher, supported by solid weekly export sales, oversold technical conditions, and firming cash basis levels.

 

Analysts expect soybeans to open 2-3 cents per bushel higher.

 

In overnight electronic trade, March soybeans were 2 1/2 cents higher at US$5.67 1/2, March soymeal was US$0.20 higher at US$178.60 and March soyoil was 12 points higher at 21.205 cents per pound.

 

Confirmation of strong Chinese buying ahead of the Lunar New Year celebrations in Asia, basis levels firming, and non-threatening weather conditions for South American crops are seen providing some stability to prices following recent setbacks, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

2005-06 marketing year export sales from the U.S. Department of Agriculture were 1,278,700 metric tonnes, highlighted by sales to China totaling 499,000 tonnes and to unknown destinations at 440,000 tonnes. 2006-07 marketing year sales totaled 72,000 tonne. Pre released analyst's estimates ranged from 650,000 to 850,000 tonnes. However, talk across the trading floor Thursday had sales totaling above 1,000,000 tonnes.

 

Soymeal sales were 158,900 tonnes compared to estimates of 25,000 to 125,000 tonnes. Soyoil sales came in at 1,100 tonnes while trade guesses were zero to 10,000 tonnes.

 

Traders said the sales were good, but many had anticipated strong sales and place more emphasis on technical factors, with the market being overdue for a bounce after declining in 9 of the last 10 trading days heading into the weekend.

 

Technical analysts said first resistance for March soybeans is seen at US$5.69 1/2 - the top of Wednesday's downside price gap--and then at US$5.78 - the bottom of last week's downside price gap on the daily bar chart. First support is seen at US$5.63 1/2 - this week's low - and then at US$5.60.

 

Firming cash basis should provide some underlying support, as farmer selling slows with cash values only 10-15 cents above loan values, added Roose.

 

Meanwhile, DTN Meteorlogix Weather Service said less rain and warmer temperatures are on tap for Parana and Mato Grosso Do Sul than was thought yesterday, at least through five days. Some chance for increasing rain is forecast for this area later in the period.

 

In Argentina, recent rainfall and cooler temperatures have eased stress to corn and soybeans. During the 10 day forecast period there is a slight chance for light showers tomorrow and a little better chance for showers next Tuesday, Meteorlogix said.

 

In overseas markets, China's Dalian Commodity Exchange soybean futures settled mostly higher Friday, thanks to light speculative buying which took cues from U.S. soybean prices, traders said. The benchmark May 2006 soybean contract rose RMB9 to settle at RMB2,653 a metric tonne, after trading between RMB2,641 and RMB2,661/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended little changed Friday as the dull, range-bound trading pattern of recent days persisted. The benchmark April CPO contract ended at MYR1,436 a metric tonne, unchanged from Thursday.

 

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