May 26, 2006

 

CBOT Soy Outlook on Friday: Steady-firm following overnight

 

 

Soy complex futures at the Chicago Board of Trade are called to open steady to firmer on Friday as light short covering is expected following overnight strength.

 

In e-cbot trade, most-active July soybeans were up 1 1/2 cents at US$5.85 3/4 a bushel. July soymeal rose 60 cents to US$174.10 a short tonne. July soyoil was up 16 points to 25.25 cents a pound.

 

July soybeans are called to open steady to 2 cents higher.

 

Trading could be quiet Friday at the CBOT ahead of the three-day weekend. Already volume was thinner on Thursday and sources said that is likely to continue as traders might want to square positions early to kick-start the weekend. On Monday, the CBOT and the US government are closed for the Memorial Day holiday. Pit trade resumes on Tuesday.

 

"I don't think we'll see any aggressive selling today. Plus we've seen a bump up in corn and wheat and that offers some crutches to the beans," said John Kleist of Kleist Agriculture Consulting.

 

Midwestern weather continues to favor germinating and developing corn and soybean crop, said DTN Meteorlogix weather firm. In the western corn belt, conditions will benefit crops, with some scattered thundershowers possibly return to the region early next week. In the eastern Midwest the weather firm said the warming trend in the region will help seedlings. Long range charts suggest cooler weather for a time next week in the east.

 

The forecast is warmer and drier that previous forecasts, so there is some bullish talk that the weather could be stressful to crop, but other analysts discount it. "We've had heat, humidity and rain. Sounds like a greenhouse to me," said one analyst who said the talk of stressful weather conditions is premature.

 

A technical analyst said a two-week-old downtrend for July soybeans remains in place on the daily bar chart, with the next downside price objective is the April low of US$5.68 1/4. It will take a close back above resistance at US$5.95 to provide the bulls some fresh upside technical momentum.

 

In other exchange news, crude palm oil futures on the Bursa Malaysia Derivatives rose moderately Friday, supported by some short-covering on an otherwise range-bound. August gained MYR5 to MYR1,446.

 

China's Dalian Commodity soybean futures crept up in a quiet trade, following overnight gains in the CBOT soybean futures. September settled up RMB10 at RMB2,661 a metric tonne.

 

Rotterdam soybean prices were weaker, while soymeal prices were firmer. European vegoils were mixed.

 

India's Meteorological Department said the monsoon arrived Friday, hitting the southern coast of Kerala province a week ahead of schedule. Agriculture Secretary Radha Singh, India's most senior bureaucrat for farm affairs, said the early arrival of the monsoon will immensely benefit sowing of crops such as rice, groundnut, soybeans and sugar cane.

 

Cash-strapped Brazilian farmers will get a break from their government as Brazilian Agriculture Minister Roberto Rodrigues said Thursday that grain and soy farmers would automatically have their 2005 and 2006 government farm debts extended for four years, rather than the usual loan life of 12 months.

 

In its first soybean auction, Brazil's Agriculture Ministry sold 29% of the 2 million metric tonnes of the oilseed. Additionally a put-option auction was also held for farmers Soy growers throughout the center-west have been selling soy well below the cost of production, especially in Mato Grosso, Brazil's top soy producer.

 

Brazil intends to auction at least 15 million tonnes of soybeans this year. The program will not be continued in 2007.