February 16, 2007

 

CBOT Soy Outlook on Friday: Steady to down on flat e-CBOT, weak sales

 

 

Chicago Board of Trade soybean futures are called to open steady to lower Friday after ending the overnight session unchanged and with possible pressure from weak export sales, sources said.

 

In e-cbot trade, March soybeans ended flat at US$7.58 3/4 per bushel.

 

The U.S. Department of Agriculture reported weekly soybean export sales for the week ended Feb. 8 were 380,700 metric tonnes, below trade expectations. The sales were 53% below the previous week and the prior four-week average.

 

Analysts had predicted sales would be 450,000 to 700,000 tonnes.

 

Major buyers included China, which took 252,100 tonnes; the Netherlands, which bought 203,100 tonnes; and Germany, which bought 121,300 tonnes. The increases were offset by decreases of 461,000 tonnes for unknown destinations, according to the USDA.

 

Soybean futures have rallied recently on supply concerns amid expectations that U.S. producers will plant more corn this spring to take advantage of high prices associated with ethanol demand. There are ideas soybean prices need to keep up gains with in corn to prevent losing more acreage.

 

Lower-than-expected weekly export sales, however, may cause the soybeans to give back a little ground to corn, an analyst said Friday.

 

Still, funds have been active buyers in the soybeans lately, and could push prices higher, a source noted. A technical analyst said bulls still have upside technical momentum on their side.

 

The next major upside price objective for the soybean bulls is to close prices above solid psychological resistance at US$8. The next downside price objective for the bears is closing prices below solid support at US$7.20.

 

First resistance for January soybeans is seen at Thursday's contract high of US$7.59 1/2 and then at US$7.65. First support is seen at Thursday's low of US$7.52 and then at US$7.48 1/2.

 

Uncertainty over the size and quality of Brazil's soy crop remains somewhat supportive for CBOT soybeans, a floor broker said.

 

Wet to very wet weather is an increasing concern for harvest delays and quality problems through the Mato Grosso region and possibly in Goias, the DTN Meteorlogix weather firm reported. The pattern is expected to continue.

 

Conditions are generally favorable in Brazil's other major growing areas, Meteorlogix said.

 

In Argentina, moderate to heavy thunderstorms Thursday and Friday should help maintain soil moisture for crops, Meteorlogix said.

 

Argentine cash soy prices were up on the week at the Rosario Grain Exchange on Thursday, in line with similar gains at the CBOT, analysts said.

 

Spot soy traded at ARS620 (US$200) per tonne at the Rosario Grain Exchange Thursday, up from ARS605 a week ago. Some 20,000 tonnes were traded.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Friday, tracking gains in soybean contracts on the CBOT. The Dalian Commodity Exchange will be closed next week for the Lunar New Year holiday, which begins on Feb. 18.

 

Soybean prices in China's major soybean-producing regions rose in the week to Friday, again supported by gains in soybean futures at CBOT, sources said. Rising import prices also pushed up domestic prices despite recent sluggish supply and demand, an analyst at the China National Grain & Oils Information Center said.

 

Crude palm oil futures on the Bursa Malaysia Derivatives, meanwhile, ended higher Friday, boosted by speculation ahead of an upcoming holiday. Little buying or selling interest was seen, as many market participants had already gone on holiday ahead of the Lunar New Year, traders said.

 

In other news, Indonesia's PT Perkebunan Nusantara said it sold 1,500 metric tonnes of crude palm oil offered in a government auction Friday.