May 17, 2006

 

CBOT Soy Outlook on Wednesday: Firmer following outside markets

 

 

Soy complex futures at the Chicago Board of Trade are called to open firmer Wednesday, supported by overnight strength and a rally in outside markets.

 

Most-active July is called to open 2-4 cents a bushel higher.

 

In e-cbot July soybeans rose 4 cents a bushel to US$6.06 3/4 and new-crop November soybeans also gained 4 cents to US$6.28 3/4. July soymeal rose US$1.50 a short tonne to US$177.70 and July soyoil rose 25 points to 25.96 a pound.

 

Crude oil futures at the New York Mercantile Exchange and metals futures on the Comex division of the Nymex were stronger in early dealings and could underpin soybeans.

 

"We're definitely watching the outside market. The trade we're seeing now is similar to the 1979-82 time frame. We were heavily influenced by the outside markets then, by interest rates, and silver particularly. If silver was up 20 cents, we'd be up 2 cents on beans," said Don Roose, president, U.S. Commodities, West Des Moines, Iowa.

 

Floor traders said they are watching the action of the funds, especially with the expected strength not only in outside inflationary markets, but also in corn and wheat. If grains are up across the board, soybeans will join the fray, they said.

 

The market continues to watch the weather developments. DTN Meteorlogix weather firm said in the western Midwest cool weather is expected to slow emergence and crop development in the next five day, but no damaging cold is indicated. Warmer weather is forecast to develop during the 6-10 day period. In the eastern corn belt the cool to cold weather remains for another five to six days before warmer weather arrives. Here, too emergence and development of crops will be slow but damaging cold is not expected.

 

Roose said in his section of Iowa, weather continues to improve and overall is generally favorable. "We just need warmer and drier conditions," he said.

 

Even though the cooler-than-normal temperatures in the Midwest are delaying germination, Roose said the market doesn't seem to be too worried about it. "There doesn't seem to be a lot of talk on that. There's always some replanting, but it doesn't seem to be a big issue," he said.

 

In other oilseed markets, crude palm oil futures on the Bursa Malaysia Derivatives were weaker in quiet trade as a stronger ringgit capped the market's upside. August CPO fell MYR2 at MYR1,463 a metric tonne. Soybean futures traded on China's Dalian Commodity Exchange were higher, in step with other commodities which pared losses in the previous session. September gained RMB10 to RMB2,659 a metric tonne.

 

Asian sources tell Dow Jones Newswires that demand for soybeans there could slow in the coming week as China continues to cut back on its imports, while Japan is unlikely to step up soybean imports significantly. China's needs for soybeans are not great as traders said it's likely that country has already booked import orders close to 10 million metric tonnes since March.

 

However, traders expect May shipment of soybeans to China may top 3 million tonnes, likely of South American origin.

 

Japan might purchase soyoil to swap for canola, due to the high cost of rapeseed.