May 3, 2007

 

CBOT Soy Outlook on Thursday: Flat up 2 cents; e-CBOT, corn spillover support

 

 

Chicago Board of Trade soybean futures are seen starting Thursday's day session with a steady to firmer undertone, supported by spillover strength from corn.

 

In e-CBOT trade, May was 1/2-cent lower at US$7.33 3/4, July was 2 3/4 cents higher at US$7.51 1/4, and November soybeans were 2 1/4 cents higher at US$7.79 1/4.

 

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

 

The soybean market will try and keep up with advancing corn futures initially, but the market is seemingly treading water awaiting fresh inputs with many participants thinking despite corn planting delays, the US farmer is committed to planting corn this year, said Don Roose, president U.S Commodities in West Des Moines, Iowa.

 

The trade's focus is clearly on the new crop as old crop fundamentals do not support current price levels, Roose added.

 

Old crop futures should encounter some pressure from net weekly export sales reductions for old crop supplies, and with record inventories and basis levels in the country at historical lows, upside potential remains limited, analysts said.

 

However, the uncertainty of new crop acreage and production as well as strong weekly export sales for the 2007-08 marketing year are seen providing some price strength to deferred month futures, analysts added.

 

A market technician said a two-month-old downtrend line is still in place on the July soybean daily bar chart. Soybean bulls would regain fresh upside technical momentum by producing a close above solid chart resistance at this week's high of US$7.58 1/4 basis the July future. The next downside price objective is closing prices below solid support at Tuesday's low of US$7.38 1/2.

 

First resistance for July soybeans is seen at US$7.50 and then at Wednesday's high of US$7.56. First support is seen at US$7.40 and then at US$7.38 1/2.

 

The U.S. Department of Agriculture reported weekly soybean export sales were 471,300 metric tonnes for the week ended April 26. Included in the total were net sales reductions of 70,700 metric tonnes for the 2006-07 marketing year. The 2006-07 sales were a marketing-year low. Analysts had forecast sales between 150,000 and 400,000 metric tonnes. The principal buyers were Mexico with 100,400 metric tonnes, and Japan with 55,200 tonnes. The 2006-07 sales were more than offset by a net decrease for China, with 354,900 tonnes switched to the 2007-08 marketing year. Soymeal sales were a net 124,400 tonnes, and soyoil commitments were 3,500 metric tonnes.

 

The U.S. Census Bureau revised its March soyoil stocks figure, raising the March stocks figure to 3.366 billion pounds from the 3.354 reported April 26. The figure is up from February's stocks of 3.281 billion pounds and well above the 2.718 billion pounds reported at the same time last year.

 

The DTN Meteorlogix Weather Service forecast said increasing shower activity may lead to field work and planting delays in the western Midwest. This is especially likely for the Dakotas and western Minnesota but may also be possible over parts of Iowa. In the eastern Midwest, showers in the south today and in the west during Friday and Saturday may cause delays to field work and planting. However, it continues to be quite warm and this should help dry field between the shower threats.

 

A total of 1,110 deliveries receipts recirculated against May soybean futures Thursday. Large issuers included a customer account of Man Professional Clearing which issued 431 contracts. Stoppers were scattered with a customer account at Man Professional Clearing the primary stopper with 476 lots. The last trade assigned was May 2.

 

In overseas markets, bullish price outlooks from industry analysts and strong demand in the cash market gave a massive boost to crude palm oil futures on the Bursa Malaysia Derivatives Thursday, with the benchmark contract setting a new record high for 2007 and traded volume logging a new daily record high. The benchmark July contract settled up MYR85 at MYR2,299 a metric tonne on the first day of trading after a two-day hiatus due to national holidays in Malaysia. The benchmark's previous 2007 high was MYR2,288/tonne. The market last reached MYR2,300/tonne, its intraday high, over eight years ago.

 

Chinese soy futures markets are closed until May 8, in observance of the Labor Day holiday.