April 6, 2006

 

CBOT Soy Outlook on Thursday: Up 3-4 cents; in tune with overnight trade

 

 

Chicago Board of Trade soybean futures are seen starting Thursday's session on firm footing in an extension of overnight action, as the market attempts to consolidate recent declines.

 

Analysts expect soybeans to open 3 to 4 cents per bushel higher.

 

In overnight electronic trade, May soybeans were 4 1/4 cents higher at $5.65 3/4, May soymeal was $1.50 higher at $173.80 and May soyoil was 23 points higher at 22.60 cents per pound.

 

The market is due for a correction, with carryover momentum from Wednesday's close, decent weekly export sales, indecision over the size of the Brazilian soy crop and positioning ahead of Monday's supply and demand report providing support, said John Kleist of Kleist Agricultural consulting.

 

The influence of higher metals and energy markets is seen attracting fund related technical buying to aide the higher tone as well. The market staged a mini reversal higher Wednesday and should generate some buying, particularly with May soybeans near major psychological support in the $5.50 area, added Kleist.

 

Technical analysts said serious near-term chart damage has been inflicted recently, to suggest that prices can continue on a near-term path lower. It will take a close above chart resistance at $5.80 to provide fresh upside technical momentum.

 

First resistance for May soybeans is seen at $5.65 and then at $5.72. First support is seen at $5.56 1/2 - Wednesday's low - and then at $5.50.

 

Weekly soybean sales were encouraging as well, with a decent amount of sales achieved with China not the principle buyer, Kleist said. On the flip side, analysts said sales in the soy products were tepid, with soymeal old crop sales a marketing year low and soyoil sales resulting in net cancellations.

 

Meanwhile, net weekly U.S. old-crop soybean export sales of 354,300 metric tonnes were 61% above the previous week and 6% over the prior 4-week average, according to the U.S. Department of Agriculture. 2006-07 marketing year sales of 14,500 tonnes were to Japan. Analysts anticipated sales in a range of 200,000 to 350,000 tonnes. Weekly U.S. soymeal export sales totaled 68,200 metric tonnes, including 37,100 old crop sales and 31,100 new crop sales. Weekly soyoil sales resulted in a net reduction in sales of 900 tonnes.

 

U.S. Midwest cash soybean basis bids mostly unchanged Thursday, cash dealers said.

 

DTN Meteorlogix Weather Service forecast said episodes of scattered showers and thunderstorms will likely lead to harvest delays during the 5-day period in Brazil. In Argentina, thunderstorms in the western and northern crop areas will likely cause delays to the harvest.

 

Rotterdam soybeans and soymeal prices were higher, and European vegoils were mixed.

 

In overseas markets, most soybean futures on China's Dalian Commodity Exchange settled slightly higher Thursday, tracking moderate gains in overnight Chicago Board of Trade soybean futures, analysts said. The benchmark September 2006 soybean contract settled RMB11 higher at RMB2,633 a metric tonne, after trading between RMB2,629/tonne and RMB2,637/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended marginally higher Thursday after a choppy trading day, with a strengthening ringgit limiting the market's ability to rebound from recent lows. The benchmark June CPO contract ended at MYR1,413 a metric tonne, up MYR2 from Wednesday.