April 26, 2007

 

CBOT Soy Outlook on Thursday: Up 2-3 cents on spillover, crush, sales data

 

 

Chicago Board of Trade soybean futures are seen starting Thursday's day session higher, continuing the overnight theme, benefiting from spillover support from neighboring grains, friendly demand reports and near term technical support, analysts said.

 

In e-CBOT trade, May was 1 1/2 cents higher at US$7.23, July was 2 cents higher at US$7.39 3/4, and November soybeans were 1/2-cent higher at US$7.65.

 

CBOT soybean futures are called to start the session 2 to 3 cents higher.

 

The market is poised to stretch its legs higher in early trade, feeding off the bullish stances in other grains, while supportive weekly export sales and Census crush data aide the higher theme, analysts said.

 

Technically inspired buying is expected to attract speculative buying amid ideas the market has secured a near term low based on its ability to hold underlying support levels in prior sessions, analysts added. Nevertheless, lingering concerns over potential acreage shifts from corn to soybeans due to spring planting slow downs, may limit upside potential in new crop contracts, traders said.

 

A technical analyst said a strong close Thursday would give soybean bulls more confidence that a near-term low is in place. However, right now a two-month-old downtrend line is still in place on the daily bar chart. Soybean bulls would regain some upside technical momentum by producing a close above solid chart resistance at US$7.50 basis the July contract. The next downside price objective is closing prices below solid support at US$7.22.

 

First resistance for July soybeans is seen at US$7.40 and then at US$7.45. First support is seen at Wednesday's low of US$7.28 and then at this week's low of US$7.25 1/2 and then at US$7.22.

 

The U.S. Department of Agriculture reported weekly soybean export sales were 434,100 metric tonnes for the week ended April 19. Included in the total were sales of 11,600 metric tonnes for the 2007-08 marketing year. The 2006-07 sales were a marketing-year low, 49% above the previous week, and 78% higher than the prior four-week average. Analysts had forecast sales between 150,000 and 350,000 metric tonnes. The principal buyers were Indonesia with 83,900 metric tonnes, Japan with 65,400 tonnes and China buying 64,300 tonnes. Soymeal sales were a net 153,600 tonnes, and soyoil commitments were 16,600 metric tonnes.

 

The Census Bureau reported soybean crushings in March totaled 155.9 million bushels. The figure was above the average survey estimate of 154.9 million bushels, up from February's 136.8 million and above last year's 149.5 million. Soyoil stocks climbed to 3.354 billion pounds from February's 3.279 billion. The average of survey estimates was 3.398 billion pounds. Soymeal stocks were reported at 330,292 short tonnes. The stock figure was up from February's 289,648 and above the average estimate of 325,800.

 

The DTN Meteorlogix Weather Service forecast said wet or very wet conditions will keep planting progress in the western Midwest very slow this week. In the eastern Midwest, rains this week will likely keep planting progress slow or very slow into the weekend. Some improvement is possible early next week.

 

In other news, E.I. Dupont de Nemours & Co. (DD) Thursday submitted its Optimum genetically modified soybean for European Union approval, risking aggravating the deep divisions on agriculture biotechnology in the E.U.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Thursday, following Wednesday's CBOT gains. The benchmark September 2007 contract settled RMB41 higher at RMB3,121 a metric tonne.