May 25, 2006

 

CBOT Soy Outlook on Thursday: Weaker on low crush, dull exports

 

 

Bearish usage data and lackluster exports are expected to pressure soy complex futures at the Chicago Board of Trade on Thursday, analysts said.

 

Most-active July soybeans are called to open steady to two cents a bushel weaker.

 

In e-cbot trade, July soybeans were flat at US$5.82 1/2 cents a bushel, while July soymeal fell 60 cents to US$171.70 a short tonne and soyoil slipped 8 points to 25 cents a pound.

 

The U.S. Census Bureau said the April soybean crush was 135.3 million bushels, down from expectations of 137.5 million bushels. Meanwhile soyoil stocks were 2.751 billon pounds, up from the estimate of 2.650 billion. Soymeal stocks were 419,244 short tonnes, significantly higher than the trade estimate of 298,500 short tonnes.

 

"The crush was lousy. The oil and meal was pretty negative and that could hit the products today," one long-time CBOT floor trader said.

 

Export sales data released Thursday was also nothing for bulls to use for support.

 

The U.S. Department of Agriculture's weekly export sales data showed soybean sales at 234,500 metric tonnes for old-crop and 18,000 tonnes for new-crop. This compares to trader estimates of 100,000 to 350,000 tonnes. Soybean export sales were 29% below the week earlier and 8% under the prior 4-week average. The major buyers were Mexico, Indonesia and Japan. New-crop sales were also for Japan.

 

Soymeal sales were 87,300 tonnes, while estimated at 75,000 to 100,000 tonnes. Sales were 45% below the previous week and 3% under the prior 4-week average. The major buyers were Mexico, Turkey, Canada, Colombia, and the Dominican Republic. Soyoil sales were 9,500 tonnes, with estimates ranging from zero to 600 tonnes. Cuba and Canada were the top buyers.

 

"Honestly, the only thing good were the soyoil sales," another floor trader said.

 

In other export news, South Korea bought 110,000 metric tonnes of South American-origin soymeal for a November-December shipment.

 

DTN Meteorlogix said the western corn belt is forecast to see mainly favorable conditions for early crop development and scattered thundershowers may return to the region early next week. In the eastern corn belt emerging corn and soybeans should benefit from a turn to warmer temperatures during the coming days.

 

"The weather remains bearish for prices" the long-time trader said.

 

Fundamentally the news for soybeans is likely to pressure prices, but analysts and floor sources said the downside is likely limited, with the first target the small downside gap in July soybeans around US$5.78 3/4 from mid-April. However, they don't see a big sell-off in soybeans due to the recent break. Outside markets - particularly metals and energy are a little firmer, which could limit losses.

 

Analysts also pointed out if fund buying - whether its traditional commodity fund, hedge or index funds - come into the market, that could offset the bearish fundamentals and help soybeans and products overcome any weakness.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives were flat to a touch firmer, despite dollar strength, traders there said. August gained MYR3 to MYR1,441 a metric tonne.

 

Soybean futures traded on China's Dalian Commodity Exchange fell in thin trade, following overnight losses in CBOT soybean futures. September lost RMB11 lower at RMB2,651 a metric tonne.

 

China's Dalian Commodity Exchange said Thursday its new delivery warehouse for its No. 2 soybean futures was put into use recently in Qingdao, located in Shandong province. The exchange hopes to increase trading activity for genetically-modified No. 2 soybean futures, with the new delivery warehouses and revised its contracts.

 

Rotterdam data is unavailable due to a European holiday.