April 13, 2006

 

CBOT Soy Outlook on Thursday: Flat-up; consolidate ahead of long weekend

 

 

Soybean futures at the Chicago Board of Trade are expected to start Thursday's session firmer, in step with overnight action as the market attempts to consolidate ahead of the extended holiday weekend.

 

Analysts expect soybeans to open flat to 2 cents per bushel higher.

 

In overnight electronic trade, May soybeans were 1 3/4 cent higher at $5.62 1/4, July soybeans were 3/4 cent higher at $5.75 1/2, May soymeal was $1.10 lower at $170.80 a short tonne and May soyoil was 14 points higher at 22.78 cents per pound.

 

A quiet news front with export sales in line with estimates, positioning ahead of the long weekend and underlying support from declining Brazilian crop production estimates are seen providing some upside potential for the market, analysts said.

 

CBOT markets will be closed Friday in observance of the Good Friday holiday.

 

Lingering talk of record commercial length in the market is expected limit downside movement, but with record U.S. supplies, a record Brazilian crop and record projected new crop acreage, upside potential remains tempered as well.

 

Trade consolidation maybe the theme of the session, but if buying interest shows signs of exhaustion, futures will be poised to retreat lower as fundamental influences continue keep buyers hesitant to push upside moves, said a CBOT commission house broker.

 

Market technicians say it will take a close above chart resistance at $5.85 to provide some fresh upside technical momentum. A close below the November low of $5.65 in July futures would generate more solid downside technical momentum to suggest another leg down in prices.

 

First resistance for July soybeans is seen at $5.79 1/2 - Wednesday's high - and then at $5.81 1/2. First support is seen at $5.72 3/4 - Wednesday's low - and then at $5.68 1/4 - this week's low - and then at $5.65 - the November low.

 

Meanwhile, net weekly U.S. old-crop soybean export sales of 344,200 metric tonnes were 3% below the previous week but 16% over the prior 4-week average, according to the U.S. Department of Agriculture. 2006-07 marketing year sales of 1,760,600 tonnes were mainly for China. Analysts anticipated old crop sales in a range of 200,000 to 350,000 metric tonnes. New crop sales in the same period were expected in a range of 1,750,000 to 1,800,000 tonnes.

 

Weekly U.S. soymeal export sales totaled 85,300 metric tonnes. Weekly soyoil sales were 700 tonnes. No new crop soyoil sales were reported.

 

U.S. Midwest cash soybean basis bids are unchanged to higher Thursday, cash dealers said. Spot cash soybean bids were up 1 cent in Evansville, Ind., up 2 cents in Champaign, Ill., and up 5 cents in Bloomington, Ill., according to cash sources Thursday.

 

DTN Meteorlogix Weather Service forecast said thunderstorms will return to Brazil's Rio Grande Do Sul Friday and spread northward. This may slow down the crop harvests, Meteorlogix said. In Argentina, thunderstorms during the next 24 hours may cause a few harvest delays, while colder temperatures during the weekend are not expected to be damaging, Meteorlogix added.

 

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

 

In overseas markets, soybean futures on China's Dalian Commodity Exchange settled lower Thursday, tracking losses in Chicago Board of Trade soybean futures, analysts said. The benchmark September 2006 soybean contract settled RMB9 lower at RMB2,582 a metric tonne, after trading between RMB2,575/tonne and RMB2,589/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Thursday, dragged down by overnight losses in CBOT soyoil futures. Profit-taking ahead of a long weekend in many countries also weighed on the market. The benchmark June CPO contract ended at MYR1,452 a metric tonne, down MYR8 from Wednesday, after moving between MYR1,449 and MYR1,459/tonne.