January 25, 2007

 

CBOT Soy Outlook on Thursday: 3-5 cents up on firmer overnight tone

 

 

Chicago Board of Trade soybean futures are expected to start Thursday's day session stronger in line with overnight gains and with little impact seen from new government reports, sources say.

 

Soybean futures are called to open 3 to 5 cents per bushel higher.

 

CBOT March soybeans ended the overnight session 4 cents higher at US$7.19.

 

New government reports for soy export sales and crushings were mostly in line with analysts' expectations and should not greatly impact the opening, a floor analyst said.

 

The U.S. Department of Agriculture reported weekly U.S. soybean export sales figures for the week ended Jan 18. totaled 615,500 metric tonnes, within analysts' estimates of sales between 500,000 tonnes and 700,000 tonnes. The sales were 44% below the week earlier and 20% under the prior 4-week average, the USDA said.

 

The biggest buyer was China, which took 260,300 tonnes. Mexico bought 89,200 tonnes, and Indonesia bought 73,900 tonnes.

 

The USDA said soyoil sales were 2,300 tonnes, at the low-end of analysts' estimates of 0 to 10,000 tonnes.

 

Soymeal sales totaled 34,400 tonnes, a marketing-year low that was below analysts' expectations. The sales were 85% below the previous week and 73% under the prior 4-week average. Analysts had expected sales of 75,000 tonnes to 150,000 tonnes.

 

"The oil and the meal were pretty low," the floor analyst noted. "I don't think it'll have much of an affect."

 

The U.S. Census Bureau, meanwhile, reported the U.S. soybean crush for December was 156.2 million bushels, while the average analyst estimate of 156.1 million.

 

Soyoil stocks were 3.068 billion pounds, above the average estimated of 3.007 billion. Soymeal stocks also exceeded expectations at 467,345 short tonnes, above analysts' average estimate of 357,000 tonnes.

 

The higher stocks and slow sales are "slightly bearish," but soy trading will probably be focus more on technicals, one floor source noted.

 

Bulls are still in firm technical control of the market, and soybeans will still likely be a follower of corn for the near term, a technical analyst said.

 

The next major upside price objective for the bean bulls is to close prices above solid longer-term resistance at the 2005 high of US$7.52 1/4, basis nearby futures. The next downside price objective for the bears is closing prices below solid support at US$7.00.

 

First resistance for January soybeans is seen at Wednesday's high of US$7.20 and then at US$7.25. First support is seen at Wednesday's low of US$7.12 1/2 and then at US$7.06.

 

Looking at the weather, soil moisture, showers and temperatures in Brazil mostly favor crops, the DTN Meteorlogix weather firm reported. The chance for increasing soybean rust, however, is still there because of excessive wetness, the firm added.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Thursday, tracking similar losses in Chicago Board of Trade soybean futures.

 

China's 2006 soybean import figure correlated with market expectations, according to new data. Imports were 28.27 million tonnes, up 6.3% on year, the data show.

 

Most analysts expect China's soybean imports to post a 6% to 7% on-year gain in 2007 to cross 30 million tonnes.

 

Still, China's soybean imports in December fell 6.6% on year to 2.44 million metric tonnes, according to the General Administration of Customs. China is the world's biggest importer of soybeans and gets most of its supplies from the U.S., Brazil and Argentina, the world's leading soybean producers

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Thursday, boosted by short-covering after recent losses and a move by India to reduce import duties. Thursday's rise came after India announced late Wednesday a cut in import duties on palm oil in an effort to curb inflation.