June 8, 2006

 

CBOT Soy Outlook on Thursday: Seen down 2-4 cents; outside market pressure

 

 

Chicago Board of Trade soybean futures are seen starting Thursday's session on the defensive, taking their lead from overnight price action, with the bearish influence of outside market pressures weighing on prices.

 

Soybeans are called to open 2 to 4 cents lower.

 

In overnight electronic trade, July soybeans were 4 cents lower at US$5.93, July soymeal was US$1.10 lower at US$181.00 and July soyoil was 24 points lower at 24.71 cents per pound.

 

The absence of fresh fundamental news in the market continues to keep traders eyeing outside influences for direction, with weather forecasts watched closely, analysts said.

 

The weather uncertainties associated with a long growing season are expected to keep the market volatile, as many analysts expect few changes to the old and new crop balance sheets in Friday's supply and demand reports.

 

U.S. Department of Agriculture is scheduled to release its monthly supply and demand revisions Friday 7:30 CDT (1230 GMT).

 

Technical factors will play a key role in determining price direction, as news of the confirmed death Al Quaida leader Abo Musab Al Zarqawi may possibly lead to commodity wide selling pressure, with crude oil and metals selling off overnight, analysts said.

 

Technical analysts say July prices closed near the session high on some short covering and some fresh speculative buying Wednesday, with the next upside price objective closing prices above this week's high of US$6.11. A close back below technical support at US$5.88 would provide fresh downside technical momentum.

 

First resistance for July soybeans is seen at US$6.01--Wednesday's high--and then at US$6.06. First support is seen at US$5.93 and then at US$5.89--Wednesday's low.

 

The DTN Meteorlogix Weather Service forecast said episodes of scattered showers and thundershowers may favor northern areas of the western Midwest Thursday and Friday. Rainfall should average 0.25-1.00 inch, and coverage should average 60-80 percent. Temperatures will average near to above normal Thursday, near to below normal Friday, and below normal Saturday.

 

In the eastern Midwest, mainly dry conditions are on tap for Thursday. There is a chance for scattered showers to develop in the region Friday and Saturday. Rainfall should average 0.10-0.50 inch and locally heavier during this period. Temperatures will average near to above normal Thursday, Meteorlogix said.

 

Meanwhile, USDA's weekly export sales data showed soybean sales at 180,700 metric tonnes for old-crop and 120,000 tonnes for new-crop. This compares to trader estimates of 100,000 to 350,000 tonnes. Soybean old crop export sales were 48% below the week earlier and 45% below the prior 4-week average. The major buyer was Japan. New-crop sales were for unknown destinations.

 

Soymeal 2005-06 sales were 72,800 tonnes, while new crop sales totaled 1,100 tonnes. Analysts estimated the sales at 60,000 to 125,000 tonnes. Soyoil sales were 500 tonnes, with estimates ranging from zero to 6,000 tonnes.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Thursday, cash dealers said. Spot cash soybean bids were up 3-cents in Peoria Ill, and in Evansville, Ind, according to cash sources Thursday.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly higher Thursday on an overnight rebound in Chicago Board of Trade soybean futures, though long liquidation pared the earlier gains, analysts said. The benchmark September 2006 soybean contract rose RMB2 to settle at RMB2,651 a metric tonne, after trading between RMB2,636/tonne and RMB2,662/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended moderately higher Thursday amid optimism that demand would improve in June. The benchmark August CPO contract ended at MYR1,460 a metric tonne, up MYR9 from Wednesday.