April 7, 2006

 

CBOT Soy Outlook on Friday: Seen down, following e-CBOT theme

 

 

Chicago Board of Trade soybean futures are seen starting Friday's session lower, in step with overnight declines as bearish fundamentals continue to send defensive signals to the market, analysts said.

 

Analysts expect soybeans to open 2 to 4 cents per bushel lower.

 

In overnight electronic trade, May soybeans were 4 1/2 cents lower at $5.59 1/2, May soymeal was $0.90 lower at $171.80 and May soyoil was 14 points lower at 22.53 cents per pound.

 

The market had a muted rally Thursday, and with China futures down overnight, a pretty good harvest weekend on tap for Brazil and Argentina and positioning ahead of Monday's supply and demand reports should apply pressure to prices, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

Traders say futures are expected to experience a slow and deliberate decline, as the market attempts to send a signal to plant less acres. Trade positioning ahead of Monday's U.S. Department of Agriculture supply and demand report is seen as a feature, with the trade anticipating the report accenting large U.S. and world soybean supplies, Roose added.

 

USDA is scheduled to release its April supply and demand revisions Monday at 7:30 a.m. CDT (1230 GMT). The average of analysts' estimates projects ending stocks at 574 million bushels. The estimates ranged from 555 to 602 million bushels. In March, USDA projected the 2005-06 carryout at 565 million bushels.

 

Market technicians said that while downside momentum presently has the technical advantage, there is a bias that there isn't a whole lot of downside movement left in soybean futures prices from present levels. However, it will take a close above chart resistance at $5.80 to provide some fresh upside technical momentum.

 

First resistance for May soybeans is seen at $5.67 3/4--Thursday's high--and then at $5.72. First support is seen at $5.61 1/2--Thursday's low--and then at $5.56 1/2--this week's low.

 

Meanwhile, the USDA announced Friday private export sales of 1.752 million metric tonnes of U.S. soybeans for delivery to China in the 2006-07 marketing year. Thursday, thirteen Chinese soybean processing companies signed 10 contracts with U.S. agricultural exporters to buy 4.98 million metric tonnes of U.S. soybeans and 20,000 tonnes of U.S. soyoil in calendar year 2006.

 

U.S. Midwest cash soybean basis bids are mixed Friday, cash dealers said. Spot cash soybean bids were down 1 cent in Evansville, Ind., up 1 cent in Champaign, Ill, and down 2 cents in Eddyville, Iowa, according to cash sources Friday.

 

DTN Meteorlogix Weather Service forecast said scattered thundershowers are possible during the weekend in Brazil but it doesn't look as heavy as it looked Thursday. Harvest delays are possible but nothing major is expected. In Argentina, some chance for thundershowers Friday night and early Saturday before turning drier again. No significant concerns for the harvest, Meteorlogix adds.

 

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

 

In overseas markets, soybean futures on China's Dalian Commodity Exchange settled lower Friday, on expectation of further losses in Chicago Board of Trade soybean futures and more imports from the U.S., analysts said. The benchmark September 2006 soybean contract settled RMB21 lower at RMB2,612 a metric tonne, after stumbling to a 4-month low at RMB2,602/tonne in the afternoon session.

 

Soybean prices in China's major producing regions fell this week on a weaker futures market, with crushers still unwilling to buy, analysts said Friday. In Heilongjiang province, China's largest soybean-producing region, prices of average-quality soybeans mostly fell RMB20 to around RMB2,400 a metric tonne. In some eastern and northern parts of the province, prices were as low as RMB2,300/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Friday, lifted by short covering interest ahead of the weekend and ahead of the release of key supply and demand data. Higher soyoil futures and expectations of improved exports in April also lent support to the market. The benchmark June CPO contract ended at MYR1,422 a metric tonne, up MYR9 from Thursday after moving between MYR1,416 and MYR1,424/tonne.

 

In other news, the H5N1 strain of bird flu, which is dangerous to humans, has been detected by Russia's Rostov regional veterinary laboratory in the blood of a migrant bird.