May 11, 2006

 

CBOT Soy Outlook on Thursday: Up on outside markets, rains, export sales

 

 

Soybean futures on the Chicago Board of Trade are poised to start Thursday's session on firm footing, following the overnight theme, with good weekly exports sales, supportive outside influences and rain slowed plantings underpinning prices, traders say.

 

Analysts expect soybeans to open 2 to 4 cents per bushel higher.

 

In overnight electronic trade, July soybeans were 4 1/2 cents higher at US$6.10 1/2, July soymeal was US$1.20 higher at US$180.020 and July soyoil was 14 points higher at 25.42 cents per pound.

 

The combination of outside market strength, the weekly exports sales, and planting concerns should attract speculative interest and keep traders leery of selling into the market, said a CBOT commission house broker.

 

Supportive technicals are seen aiding the firm tone, but fund activity will once again be the ultimate driver of prices, with many participants looking to square up a few positions ahead the Friday's supply and demand report.

 

Market technicians say market bulls have a slight technical advantage at present, but it will take a close above solid resistance at last week's high of US$6.14 1/2 to provide fresh upside technical momentum. A close below support at US$5.91 would provide fresh downside technical momentum.

 

First resistance for July soybeans is seen at US$6.11- Wednesday's high - and then at US$6.14 1/2. First support is seen at US$6.04 and then at US$6.01 1/2- the bottom of Tuesday's upside price gap.

 

Meanwhile, net weekly U.S. old-crop soybean export sales of 389,100 metric tonnes were 87% above the prior 4-week average, according to the U.S. Department of Agriculture. 2006-07 sales totaled 700 tonnes. Analysts anticipated sales in a range of 100,000 to 250,000 tonnes. Weekly U.S. soymeal export sales totaled 64,600 metric tonnes, including 61,800 old crop sales and 2,800 new crop sales. Weekly soyoil sales totaled 1,900 tonnes.

 

USDA is scheduled to release its May supply and demand report Friday at 7:30 a.m. CDT (1230 GMT). The average of analysts' estimates projects 2005-06 ending stocks at 568 million bushels. The estimates ranged from 555 million to 585 million bushels. In April, USDA projected the 2005-06 carryout at 565 million bushels. The average of analysts' estimates projects 2006-07 ending stocks at 678 million bushels. The estimates ranged from 621 million to 729 million bushels.

 

U.S. Midwest cash soybean basis bids are mostly unchanged to lower Thursday, cash dealers said. Spot cash soybean bids were down 1 1/2 cent in Peoria, Ill., unchanged in St Louis, Mo., and 2 cents lower in Evansville, Ind., according to cash sources Thursday.

 

The DTN Meteorlogix Weather Service forecast said there is a chance for a little light rain in eastern portions of the western Midwest during today and early Friday, mainly dry later Friday and Saturday. Temperatures will average below to well below normal.

 

In the eastern Midwest, showers and rain continues today and tonight through northern and eastern areas. Showers and drizzle will be common again during Friday, with a chance for a few showers Saturday. Temperatures will average below or well below normal, Meteorlogix said.

 

The Taiwan Sugar Corp. passed on bids for its tender of 23,000 metric tonnes of corn and 12,000 tonnes of soybeans, both of U.S. origin, a trader in Taipei said on Thursday.

 

In deliveries, a total of 552 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 10. A total of 434 delivery notices were posted against May soyoil. The house account at ADM Investor Services stopped 222 lots. The last trade date assigned was May 10.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled slightly higher Thursday on light speculative buying, as investors took their cue from a surge in other commodities futures. The benchmark September 2006 soybean contract settled RMB13 higher at RMB2,683 a metric tonne, after trading between RMB2,655/tonne and RMB2,699/tonne.