CBOT Soy Outlook on Friday: Seen up 3-4 cents on overnight trade

  

 

Soy complex futures at the Chicago Board of Trade are called to open firmer Friday, supported by overnight strength and ideas the market could find some buying interest if prices hold within the recent trading range.

 

Most-active May soybeans are called to open 3 to 4 cents firmer.

 

In e-cbot trade, May soybeans were up 3 1/4 cents to US$5.88 a bushel. May soymeal rose US$1.30 to US$178 a short tonne. Soyoil gained 17 points to 23.31 a pound.

 

Analysts and floor traders said a firmer start might be in store for soybeans if the market could gather steam from the e-cbot trade.

 

"Thursday we saw a choppy session but held the trading range low. We could pick up some technical support. Even though funds were sellers, they weren't aggressive. Corn and wheat are holding. All of that could give the market some support," said John Kleist of Kleist Ag Consulting.

 

Underpinning the market are reports of localized problems with soybean production in the Southern Hemisphere.

 

"We're hearing little bits and pieces coming out, little areas of problems," Kleist said, which could lead to a reduced crop size out of the region. However, he stressed, this doesn't mean that Brazil will see the same reduction in crop size as the country experienced during last year's drought.

 

DTN Meteorologix said recent rains in Argentine soybean-growing areas were sizable with good coverage.

 

"Overnight rains expanded to include the area of north-central Buenos Aires that missed the activity during the night before. This means that coverage with this event has reached the levels we were expecting 2 days ago. I would estimate that 0.50-1.50 inches and locally heavier has covered 80% to 90% of the corn, soybean and sunflower areas during the past 48 hours," the weather firm said.

 

The forecast for the soybean region this weekend calls for mostly dry weather, with temperatures below normal Friday and Saturday, but above normal Sunday. By Monday, a chance for some light showers returns.

 

A technical analyst noted May soybean prices are near the bottom of the range on the daily bar chart. A close under Thursday's and last week's low of US$5.83 could encourage bears to probe the downside, especially if the market is weak Friday. A close above last week's high of US$6.17 could give bulls staying power. First resistance for May soybeans lies at US$5.91, and then at US$5.95. First support is seen at US$5.83 and then at US$5.80.

 

The U.S. Department of Agriculture's weekly export sales were 503,600 metric tonnes, 5% below the previous week, but equaled the prior 4-week average. The biggest buyer was China, which bought 409,100 tonnes, including 167,000 MT switched from unknown destinations. Trade estimates ranged from 400,000 to 600,000 tonnes.

 

Soymeal sales were 77,300 tonnes, 50% below the week earlier and 54% under the prior 4-week average. Soyoil sales were 4,300 MT. Estimates for soymeal sales ranged from 75,000 to 125,000 tonnes and soyoil trade estimates ranged from zero to 1,000 tonnes.

 

Additionally USDA said 125,000 tonnes of soybeans were sold to Japan for the 2006-07 marketing year.

 

Rotterdam soybean and soymeal prices were steady to weaker. European vegoil prices were mixed.

 

Crude palm oil futures on the Bursa Malaysia Derivatives rose Friday as positive price outlooks from prominent analysts gave investors reasons to buy. May gained MYR25 to MYR1,492 a metric tonne. The analysts see palm oil prices as high as MYR1,600 during 2006. September soybean futures on China's Dalian Commodity Exchange rose RMB15 to RMB2,729 a metric tonne.