June 14, 2007

 

CBOT Soy Outlook on Thursday: Up 4-5 cents; e-CBOT, grain spillover support

 

 

Chicago Board of Trade soybean futures are seen starting Thursday's day session firmer, following the lead of overnight trade, with spillover strength from grain futures and dryness issues in the eastern Midwest supportive features.

 

CBOT soybean futures are called to start the session 4 to 5 cents higher.

 

In overnight e-CBOT trading, July soybeans were 5 1/2 cents higher at US$8.31 1/4 per bushel, and November was 4 1/4 cents higher at US$8.64.

 

The market will be influenced by price strength in neighboring grains, with technically inspired buying and weather concerns for the eastern Midwest expected to underpin prices, analysts said.

 

Higher overnight prices in Malaysian palm oil futures are seen lending support to soyoil and subsequently provide strength to soybeans, analysts added.

 

However, traders are expected to watch midday weather forecasts closely, as any sign of a wetter weather pattern moving into the eastern belt could trigger corrective selling amid overbought market conditions, a CBOT floor analyst said.

 

A technical analyst said market bulls have upside momentum and are looking for more on the upside in the near term. The next upside price objective for July soybeans is closing prices above solid technical resistance at the contract high of US$8.37. The next downside price objective is closing prices below solid support at US$8.00.

 

First resistance for July soybeans is seen at Wednesday's high of US$8.28 1/2 and then at US$8.32. First support is seen at US$8.20 and then at Wednesday's low of US$8.15 3/4.

 

The DTN Meteorlogix Weather Service forecast said the western Midwest has a chance for a few more thundershowers through far west areas Thursday, but dry elsewhere in the region. Mainly dry conditions or with only a few light showers in the north are seen for Friday and Saturday. Temperatures will average near normal west, and above normal east.

 

In the eastern Midwest, mainly dry conditions are expected Thursday through Saturday. Temperatures will average above normal with highs ranging from the upper 80s to the low or middle 90s Fahrenheit. Mainly dry weather is on tap for Sunday and early Monday. A chance for scattered light to locally moderate showers is possible later Monday or during Tuesday. Temperatures will average above normal Sunday and Monday, and cooler Tuesday.

 

U.S. Department of Agriculture reported weekly soybean export sales were 221,700 metric tonnes for the week ended June 7. The primary buyer was Mexico with 71,200 metric tonnes and Taiwan with 52,800 tonnes. Analysts had forecast sales between 100,000 and 250,000 metric tonnes. Soymeal sales were a net 78,300 tonnes, and soyoil commitments were 21,300 metric tonnes.

 

The National Oilseed Processors Association said Thursday its May soybean crush rates were 143.4 million bushels. It was above the April figure of 138.7 million bushels and up from 138.6 at the same period last year. Soyoil stocks were reported at 2.924 billion pounds. The stocks were up slightly from the April stock figure of 2.902 billion.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended slightly higher Thursday as the market, in negative territory for most of the day, made a late short covering-inspired recovery. The benchmark August contract ended up MYR18 at MYR2,368 a metric tonne.

 

On Singapore's Joint Asian Derivatives Exchange, trading activity remained sluggish, with volume at a meager seven lots. September CPO ended at US$666.50/tonne, up US$12.50 from Wednesday.

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Thursday on a technical rebound, but ample supplies continue to pressure prices. The benchmark January 2008 soybean contract settled RMB18 higher at RMB3,280 a metric tonne.