June 2, 2006 

 

CBOT Soy Outlook on Friday: Steady to firm; following e-CBOT theme

 

 

Soybean futures on the Chicago Board of Trade are seen starting Friday's open auction session steady to firmer, following the overnight theme, with higher outside markets providing support.

 

Soybeans are called to open steady to 2 cents higher.

 

In overnight electronic trade, July soybeans were 3/4-cent higher at US$5.87 1/2, July soymeal was US$0.70 lower at US$174.50 and July soyoil was 10 points lower at 25.05 cents per pound.

 

The strength of the outside inflationary markets should provide some strength to prices, with carryover momentum from Thursday's good technical performance serving as the catalyst for the early gains, said a CBOT commission house broker.

 

Solid weekly export sales may lend mild support to prices, but with the market remaining devoid of fresh fundamental influences, weather is emerging as an important price determinant, traders add. However, technicals remain key drivers of the market, with analysts saying it remains tough to justify higher prices fundamentally amid record supplies.

 

Technical analysts say price action in the July future Thursday scored a bullish "outside day" up on the daily bar chart, and a weekly high close on Friday would provide some fresh upside technical momentum. However, the market still has a downside technical advantage, with the next key downside price objective technical support at the April low of US$5.68 1/4.

 

First resistance for July soybeans is seen at US$5.89 - last week's high - and then at US$5.94 1/2 - the top of a gap area on the daily bar chart. First support is seen at US$5.80 and then at US$5.75 1/2 - Thursday's low.

 

The U.S. Department of Agriculture's weekly export sales data showed soybean sales at 345,900 metric tonnes for old-crop and 223,000 tonnes for new-crop. This compares to trader estimates of 220,000 to 350,000 tonnes. Soybean old crop export sales were 48% above the week earlier and 22% above the prior 4-week average. The major buyers were Taiwan and Mexico. New-crop sales were mostly for unknown destinations.

 

Soymeal 2005-06 sales were 133,400 tonnes, while new crop sales totaled 26,000 tonnes. Analysts estimated the sales at 50,000 to 100,000 tonnes. Soyoil sales were 1,100 tonnes, with estimates ranging from zero to 10,000 tonnes.

 

The DTN Meteorlogix Weather Service forecast said the western Midwest is in store for mainly dry conditions Friday and Saturday, with a few light thundershowers possible Sunday. Temperatures will average above normal with highs mostly in the 80s to possibly a few very low 90s during the three day period.

 

In the eastern Midwest, showers may linger Friday through the southeastern and far eastern areas of the region. Mainly dry conditions with only a few very light showers possible are on tap for the weekend. Temperatures will average near to below normal, Meteorlogix said.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Friday, cash dealers said. Spot cash soybean bids were up 1-cent in Keokuk, Iowa, up 1-cent in central Ill, and down 1-cent in St. Louis, Mo., according to cash sources Friday.

 

Rotterdam soybeans and soymeal prices were higher. European vegoils were mixed.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Friday on gains in Chicago Board of Trade soybean futures Thursday. The benchmark September 2006 soybean contract settled RMB18 higher at RMB2,621 a metric tonne, after trading between RMB2,610/tonne and RMB2,630/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended mixed Friday, continuing the dull, range-bound trading that had been a feature all week long. The benchmark August contract ended at MYR1,439 a metric tonne, unchanged from Thursday after moving within a narrow MYR7 range.