March 31, 2006

 

CBOT Soy Outlook on Friday: Down 3-5 cents on USDA data, US midwest rains

 

 

Soybean futures at the Chicago Board of Trade were called to open down 3-5 cents Friday on bearish U.S. Department of Agriculture 2006 prospective U.S. plantings and quarterly stocks data, but losses could be limited by possible speculative fund buying and an expected rally in neighboring corn futures, brokers said.

 

Lingering rains in the eastern U.S. Midwest on Friday; forecasts for more U.S. Midwest rains Sunday and Monday ahead of the key plantings season; and the building South American soy harvest were also seen as bearish, they noted.

 

The U.S. Department of Agriculture forecast Friday U.S. farmers would plant a record 76.9 million acres with soybeans this year, a 7% increase from 2005 due mainly to a switch from other crops.

 

"Acreage increases are expected in all growing areas except in the central and southern Atlantic Coast states and the southern Great Plains," USDA said. "High input costs have farmers in the Corn Belt switching to soybeans from corn."

 

At the same time, the USDA lowered its forecast for U.S. corn planting this year by 5% due to higher fertilizer and fuel costs.

 

The USDA on Friday, also estimated March 1 U.S. soybean stocks at a record 1.67 billion bushels, up 21% from 1.38 billion bushels a year ago and exceeding the record set in 1999 by 1%.

 

In overnight screen trade, the e-cbot May soybean contract settled up 1/4 cent at $5.88 a bushel. May soymeal ended up 10 cents a short tonne at $179.50, and May soyoil closed down 0.02 cents at 23.15 cents a pound.

 

While CBOT soy bears are still in near-term technical control the bulls have gained some momentum and Friday could be a very important trading day for the bean bulls, a technical source said.

 

A solidly higher close would be one clue that a near-term low is in place, while a close below this month's low of $5.71 1/4 would be bearish to suggest another solid leg down in prices, he added. It will also take a close above chart resistance at $5.95 to provide the bulls with better upside technical momentum, he noted.

 

First resistance for May soybeans is seen at $5.89 - Thursday's high - and then at $5.95. First support is seen at $5.84 1/2 - Thursday's low - and then at $5.80.

 

CBOT traders noted that speculative funds were thought to be net short about 16,730 CBOT soybean futures and 12,700 CBOT soymeal futures before Friday's opening bell. Funds were thought to be net long about 27,600 CBOT soyoil futures.

 

Month- and quarter-end positioning could limit Friday's CBOT soy losses, they noted. Moreover, there is speculation that new fund moneys could flow into commodities on Monday, the first trading day of the new quarter.

 

U.S. Midwest cash soybean basis bids were mixed Friday, cash dealers said. Spot cash soybean bids were down 3 cents in St. Louis, flat in Sioux City, Iowa, and up 2 cents in Toledo, Ohio, they noted.

 

In soy export news, the Taiwan Sugar Corp., or TSC, bought 12,000 tonnes of U.S.-origin soybeans on Friday, an Asian trader said.

 

At China's Dalian Commodity Exchange, soybean futures ended higher, with the benchmark September 2006 soybean contract up RMB15 to settle at RMB2,701 a metric tonne, after trading between RMB2,697/tonne and RMB2,708/tonne.

 

DCE September 2006 soymeal rose RMB17 to settle at RMB2,311/tonne, after trading between RMB2,306/tonne and RMB2,318/tonne. September 2006 soyoil settled RMB17 higher at RMB5,165/tonne.

 

In Malaysia, crude palm oil futures on the Bursa Malaysia Derivatives ended mixed. The benchmark June CPO futures contract ended at MYR1,437 a metric tonne, up MYR3 from Thursday.

 

In other vegetable oil news, India on Friday cut its base import price for crude palm oil by $4 to $430 a metric tonne and cut the base import price for crude soybean oil by $13 to $524/tonne, according to a notice posted on the Finance Ministry's Web site.

 

India's federal government sets base import prices for palm and soyoils. Import duties are calculated from these prices regardless of the actual price at which importers buy the commodity.

 

The Ministry of Finance generally issues notices every two weeks about changes in the base import prices of edible oils, even if the base prices remain unaltered.

 

In Rotterdam, spot soybean and soymeal prices were higher, cash sources said.