March 9, 2006

  

CBOT Soy Outlook on Thursday: Up 1-2 cents on e-CBOT strength, sales

  

 

Soy complex futures at the Chicago Board of Trade are called to open firmer Thursday, supported by overnight strength and decent government-reported export sales.

 

Much of Thursday's session will likely be devoted to positioning ahead of Friday's U.S. Department of Agriculture March supply and demand report.

 

Most active May soybeans are called to open 1-2 cents firmer.

 

In e-cbot trade, May soybeans rose 2 1/4 to US$5.86 1/4 a bushel. May soymeal gained 70 cents to US$174.10 a short tonne. May soyoil rose 3 points to 23.95 cents a pound.

 

The USDA said weekly soybean export sales for 2005-06 totaled 504,600 metric tonnes, which were 37% above the previous week and 5% over the prior four-week average. China was the biggest buyer at 336,100 tonnes, including 110,000 tonnes switched from unknown destinations, and Japan which bought 130,200 tonnes. Trade estimates ranged from 250,000 to 450,000 tonnes. Sales for 2006-07 were 245,400 tonnes.

 

"If you look at the old-crop and new-crop sales combined it's good," said Don Roose, president of U.S. Commodities. "Even just old-crop was above the estimate. It suggests when (prices) set back we see demand. Plus we haven't lost much business to South America."

 

Roose said the new-crop sales were a surprise and should underpin trade.

 

Soymeal sales reached 78,000 tonnes, which were 13% below the week earlier and 31% under the prior four-week average. Sales estimates ranged from 50,000 to 125,000 tonnes. Soyoil sales were 22,500 tonnes, which primarily went to unknown destinations at 15,800 tonnes. Estimates for export sales ranged from zero to 1,000 tonnes.

 

Strong soyoil sales should help soyoil-soymeal spread trades, he added.

 

In other export news, South Korea bought 52,500 metric tonnes of South American-origin soymeal for a May-June shipment.

 

Once the market digests the sales news, traders will likely focus on Friday's report. A slight increase in soybean ending stocks is seen. Analysts surveyed by Dow Jones Newswires estimate ending stocks at 562 million bushels versus February's figure of 555 million bushels.

 

South American weather appears benign. DTN Meteorologix weather firm said Argentina should see mostly dry weather Thursday and Friday, with a Chance for scattered thunderstorms in the south and a few light showers north during Saturday. It is expected to be cooler Thursday, but warmer Friday and Saturday. Some showers are seen again for Monday.

 

Showers are forecast in Brazil's southern soybean-growing regions Thursday and Friday, although turning drier into the weekend. Temperatures are seen averaging above normal again today but it should be cooler during Friday and Saturday. Mato Grosso and Mato Grosso do Sul could also see rains Thursday and scattered to widely scattered thundershowers during Friday into Saturday. Temperatures average above normal. The extended outlook calls for mostly dry weather.

 

In global futures business, crude palm oil futures on the Bursa Malaysia Derivatives fell amid cautious sentiment ahead of supply and demand data from the Malaysian Palm Oil Board. May ended at MYR1,464 a metric tonne, down MYR5. Soybean futures on China's Dalian Commodity Exchange rose as long position holders added to gains. September gained RMB8 to RMB2,712 a metric tonne.

 

Rotterdam soybean and soymeal prices were weaker while European vegoils were mixed to firmer.

 

In other news, Swiss bank UBS AG (UBS) and Diapason Commodities Management SA launched the UBS Diapason Global Biofuel Index, the first commodity-based index for biological fuels. The index will cover 10 commodities used in the production of ethanol and biodiesel and will be published in U.S. dollars, euros, Swiss francs and yen.

 

Louis Dreyfus Agriculture Industries plans to build an biodiesel plant able to producer over 80 million gallons yearly in northern Indiana. Company officials plan to first build a 50 million bushel-a-year soybean processing plant, which will be followed by the biodiesel factory near Claypool, about halfway between Fort Wayne and South Bend.

 

Chicago Board of Trade member shareholders overwhelmingly approved measures that would eliminate barriers to simultaneous, or side-by-side, open outcry and electronic trading of CBOT agricultural products in a membership vote held Wednesday.