April 27, 2006

 

CBOT Soy Outlook on Thursday: Beans Down 2-3 cents on weak exports, China

 

 

Analysts expect Chicago Board of Trade soybean futures to open 2 cents to 3 cents a bushel lower Thursday on overnight weakness, export sales that were lower than expectations and that also set a new low for the 2005-06 marketing year.

 

News that China raised interest rates is also a concern for the market amid fears that Beijing may slow down its purchases of some commodities in the higher interest rate environment.

 

In overnight e-cbot trade, July soybeans fell 1 3/4 cents to US$5.88 1/4, July soymeal was unchanged at US$173.60 a short tonne and July soyoil fell 18 points to 25.02 cents a pound.

 

Soybean export sales for the week ended April 20 were 111,400 metric tonnes, down 43% from the previous week and 60% below the prior four-week average. The sales also set a low point for the 2005-06 marketing year.

 

China was notably absent from the sales report. Instead, Japan, Taiwan and Mexico were the top customers.

 

Shipments totaled 272,700 tonnes, down 6% from the previous week.

 

Meanwhile, U.S. soybean crushings in March were strong at 150.4 million bushels, versus 136.3 million in February, the Census Bureau reported Thursday. The number was at the high end of trade expectations looking anywhere from 143 million to 150 million bushels. The data is considered a touch friendly for the market but may get lost in the shuffle with so much other news available, a trader said.

 

Soymeal stocks were 257,860 tonnes, down from 266,030 tonnes in February.

 

March soyoil stocks were 1.305 billion pounds, versus 1.330 billion in February.

 

China raising interest rates by 27 basis points, with the benchmark lending rate rising to 5.85%, effective Friday, may command more attention that some of the other market news. While a rate tightening had been expected since it was learned last week that China's gross domestic product grew 10.2% in the first quarter, the move is seen as a first in a series of tightening moves, which analysts worry could result in less commodity demand from Beijing.

 

"I think that's a little bit of a fear, but I think still, from a product standpoint, the question is: 'How aggressive can we sell our product?'" said Jason Roose, analyst at U.S. Commodities in West Des Moines, Iowa.

 

Soybean futures on China's Dalian Commodity Exchange rose slightly on speculative buying. The September contract for No. 1 soybeans rose RMB3 to RMB2,607 a metric tonne.

 

Soymeal settled mostly higher, with the November contract up RMB15/tonne to RMB2,273/tonne. Soyoil futures fell in sluggish trade, with the September futures down RMB8/tonne to RMB5,130/tonne.

 

Meanwhile, the DTN Meteorlogix weather firm said showers are seen in the western Midwest and the eastern portion of the northern Plains Friday and Saturday, slowing fieldwork. Showers and thunderstorms are also expected in eastern areas of the Midwest on Saturday and Sunday, thus slowing down planting efforts in affected areas.