May 4, 2006

 

CBOT Soy Outlook on Thursday: Steady down 2 cents; lacks supportive features

 

 

Soybean futures on the Chicago Board of Trade are expected to start Thursday's open auction session under light pressure, weighed down by a lack of supportive features to attract significant buying.

 

Analysts expect soybeans to open steady to 2 cents per bushel lower.

 

In overnight electronic trade, July soybeans were 1/2 cent lower at $6.05, July soymeal was $0.20 lower at $176.70 and July soyoil was 12 points lower at 25.60 cents per pound.

 

The combination of softer outside markets, favorable planting outlooks for the Midwest and continued evidence of a seasonal decline in export sales have futures poised for a lower start, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

However, traders say downside movement will remain limited as commodity funds continue to cover short positions after the recent bearish technical trend was broken.

 

Nevertheless, outside market signals are pointing lower, with precious metals and crude oil futures on the defensive, leaving the market with little support to sustain upside movement. Futures have seemingly found a comfort zone, consolidating within its recent trading range. Building soyoil stocks as evidenced by the Census Bureau's upward revision to its March stocks projection is seen applying pressure to soyoil futures.

 

Technical analysts say prices this week are trading within last Friday's big trading range and it will take a close above solid resistance at last Friday's high of $6.14 to provide fresh upside technical momentum. A close below the upside gap on Friday-meaning below $5.91--would provide fresh downside technical momentum.

 

First resistance for July soybeans is seen at $6.07 1/2--Wednesday's high-and then at $6.12 1/2--this week's high. First support is seen at $6.01 1/4--Wednesday's low--and then at $5.98--the top of the upside price gap.

 

Meanwhile, net weekly U.S. old-crop soybean export sales of 182,500 metric tonnes were 64% above the previous week, but 27% below the prior 4-week average, according to the U.S. Department of Agriculture. Analysts anticipated sales in a range of 100,000 to 250,000 tonnes. Weekly U.S. soymeal export sales totaled 126,500 metric tonnes, including 124,000 old crop sales and 2,500 new crop sales. Weekly soyoil sales totaled 1,200 tonnes.

 

U. S. Census Bureau revised its March soyoil stocks figure, raising the March stocks figure to 2.691 billion pounds from the 2.686 billion pounds originally reported April 27. The figure is up from February stocks of 2.673 billion pounds and well above the 1.811 billion pounds reported at the same time last year.

 

U.S. Midwest cash soybean basis bids are mostly unchanged to lower Thursday, cash dealers said. Spot cash soybean bids were down 2 cents in Peoria Ill., and down 2 cents in St. Louis, Mo., according to cash sources Thursday.

 

The DTN Meteorlogix Weather Service forecast said the western Midwest will be mainly dry with only a few light showers in the far south areas during the next 3 days. Temperatures will average below or much below normal, with readings in the middle 30s to low 40s Fahrenheit. Frost is possible as far south as northern Iowa during this period.

 

In the eastern Midwest, there is a chance for showers near the Ohio River during Thursday and early Friday, but dry conditions prevail elsewhere in the region. Mainly dry conditions are expected Saturday. Temperatures will average near to below normal Thursday, below or well below normal Friday and Saturday. The lowest temperatures during this period should be in the low to middle 30s in Wisconsin and Michigan, upper 30s in northern Illinois, Indiana and Ohio, Meteorlogix said.

 

In deliveries, a total of 1,351 delivery notices were posted against the CBOT May soybean contract. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was May 3. A total of 403 delivery notices were posted against May soyoil. A customer account at RJ O'Brien issued 277 lots, with the house account at ADM Investor Services stopping the 403 lots. The last trade date assigned was April 28.

 

Rotterdam soybeans were mostly higher and soymeal prices were mostly lower, and European vegoils were mostly flat.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended lower for the third straight day Thursday amid ample supply and continuing concerns that a strong ringgit will make Malaysian palm oil less competitive in the international market. The benchmark July CPO contract ended at MYR1,454 a metric tonne, down MYR4 from Wednesday, after moving in a range of MYR1,445 to MYR1,462/tonne.