May 18, 2006

 

CBOT Soy Outlook on Thursday: Seen down 1-2 cents; lacks supportive inputs

 

 

Soybean futures on the Chicago Board of Trade are seen starting Thursday's session on the defensive, following overnight declines and the absence of supportive features to start the day.

 

Soybeans are called to open 1 to 2 cents lower.

 

In overnight electronic trade, July soybeans were 1 1/4-cents lower at US$6.02 3/4, July soymeal was US$0.70 lower at US$175.70 and July soyoil was 7 points lower at 25.75 cents per pound.

 

The lack of support from outside markets should promote a lower start to the day, with favorable weather outlooks heading into the weekend, bearish supply fundamentals, and a lack of a surprise in weekly export sales failing to generate support for prices, said Don Roose, president U.S Commodities in West Des Moines, IA.

 

The market will watch wheat and corn for direction as well, as another surge in those markets would probably pull soybeans along for the ride, Roose added.

 

Meanwhile, early market indicators are pointing lower, with gold, silver and crude oil futures lower in early action, but analysts say inflation worries will keep a level of support in the market, as traders remain on guard for speculative led inflationary buyers.

 

Market technicians say July futures still have a slight technical advantage. A close below support at US$5.91 would provide fresh downside technical momentum, and last week's high of US$6.20 is strong overhead resistance.

 

First resistance for July soybeans is seen at US$6.10 1/2--Wednesday's high-and then at US$6.15. First support is seen at US$6.00--Wednesday's low--and then at US$5.96 1/2.

 

Net weekly U.S. old-crop soybean export sales of 332,000 metric tonnes were 15% below the previous week and 51% above the prior 4-week average, according to the U.S. Department of Agriculture. Analysts anticipated sales in a range of 200,000 to 450,000 tonnes. Weekly U.S. soymeal export sales totaled 157,300 metric tonnes. Soyoil had a net reduction in sales of 1,400 metric tonnes.

 

The DTN Meteorlogix Weather Service forecast said the western Midwest will experience dry conditions with possibly a few light showers during today and Friday. There is a chance for scattered to widely scattered thundershowers during Saturday, with rainfall totals of 0.10-0.50 inch expected.

 

In the eastern Midwest, mainly dry conditions with only a few light showers during today through Saturday. Temperatures will average mostly below normal during today and Friday, Meteorlogix said.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Thursday, cash dealers said. Spot cash soybean bids were down 2 cents in Quincy, Ill. and down 2 cents in St Louis, MO, and up 5 cents in Sioux City, IA according to cash sources Thursday.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mixed Thursday, pressured by big losses in other local commodities futures, such as metals and fuel oil, analysts said. The benchmark September 2006 soybean contract settled RMB5 lower at RMB2,654 a metric tonne, after trading between RMB2,643/tonne and RMB2,663/tonne.