April 25, 2006

 

CBOT Soy Outlook on Tuesday: Beans flat-down 2 cents on overnight weakness

 

 

Soy complex futures are expected to start lower Tuesday at the Chicago Board of Trade, pressured by weakness overnight after the market gave up some of Monday's gains.

 

In overnight e-cbot trade, July soybeans fell 1 cent to US$5.87 1/4 a bushel. July soymeal slipped 70 cents to US$173.50 a short tonne and July soyoil dropped 21 points to 24.75 cents a pound.

 

Brian Doherty, analyst at Stewart Peterson Group in West Bend, Wis., is expecting a flat to 2 cents lower opening based on overnight weakness and a lack of fresh, market-moving news, he said.

 

"There's not a whole lot new out there. It looks like planting progress is going well for corn, and there's a school of thought that if it goes well for corn maybe farmers will plant more corn and less beans," Doherty said.

 

However, if planting goes well for corn, it will likely go well for beans, which may not be price positive, he added.

 

The U.S. corn crop was 25% planted as of Sunday, lower than last year's pace of 28% but ahead of the 22% five-year average, the U.S. Department of Agriculture reported.

 

The northern Plains and western Midwest should see mostly dry weather Tuesday and Wednesday, DTN Meteorlogix said.

 

The northern Plains will continue to be dry through Thursday, generally, with temperatures below normal Tuesday, near to above normal Wednesday and Thursday.

 

The western Midwest could see some showers late Wednesday or Wednesday night, with temperatures below or well below normal Tuesday and Wednesday, near to below normal Thursday. Showers could fall Friday in the Plains and western Midwest.

 

The eastern Midwest and Delta could see showers Tuesday, but is expected to dry out Wednesday and Thursday and be mostly dry on Friday.

 

Brazil's Rio Grande do Sul continue to see some disruptions to the remaining harvest, with generally favorable weather in Parana and Mato Grosso.

 

A technical analyst said soybean bears still have the slight overall near-term technical advantage. First resistance for July soybeans is seen at last week's high of US$5.91 1/2 and then at US$5.95. First support is seen at Monday's low of US$5.85 1/2 and then at US$5.80.

 

China's General Administration of Customs said Tuesday that March soyoil imports reached 252,744 metric tonnes, more than tripling the year-earlier figure. In January-to-March, soyoil imports were 557,476 tonnes, up 38.1% on the year. Argentina sold the lion's share of that total, sending 187,509 tonnes to China in March.

 

Soybean shipments to China rose 26.8% in March to 2,602,303 tonnes, but are flat on the year at 5,410,377 tonnes. The U.S. sold China 1,911,536 tonnes in March, up 1.2%, but January-March volume is down 21.9% at 3,884,167 tonnes. Although the U.S. is still the main soybean supplier to China, the country is also sourcing its soybeans from South America, with Argentina shipping 513,884 tonnes in March - a 849.0% rise. Brazil sent 175,525 tonnes of soybeans to China in March, up 62.2%.

 

Soymeal shipments, nearly all from India, were 115,682, up a whopping 1,820.1% in March, while January-to-March soymeal shipments are 293,406, up 2,681.3%.

 

In other news, Statistics Canada estimated its 2006 canola acreage at 11.60 million, versus 13.6 million last year, in its annual planting intentions report. The number was below estimates looking for 12.2-13.1 million acres.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives fell on profit-taking, tracking declines in other related commodity markets such as soyoil. July fell MYR12 to MYR1,482 a metric tonne.

 

Dalian Commodity Exchange soybean futures fell as physical demand for soybeans was muted. September shed RMB8 to settle at RMB2,593 a metric tonne.

 

Rotterdam soybean prices were firmer and soymeal prices were mostly unchanged. European vegoils were slightly mixed.

 

Commodities investor and financial commentator Jim Rogers said Tuesday most commodity markets are in a "secular bull run," with prices likely to keep rising for the next 10 to 15 years, despite recent weakness.

 

Given there was very little new investment in the resources sector during the last bear market and the supply constraints resulting from such under-investment, the current bull market can last as long as 2014 to 2022, he said.

 

Rogers said both oil and metals will continue to rise for the next several years, but it will be agriculture which will be the star performer in the overall commodities sector.