June 15, 2006

 

CBOT Soy Outlook on Thursday: Higher, following the overnight theme

 

 

Soybean futures on the Chicago Board of Trade are seen starting Thursday's open auction session on firm footing, in step with the overnight trend, with the outside indicators of speculative interest pointing higher as well.

 

Soybeans are called to open 2 to 4 cents higher.

 

In overnight electronic trade, July soybeans were 3 1/2-cent higher at US$5.93, July soymeal was US$1.10 higher at US$180.30 and July soyoil was 8 points higher at 24.85 cents per pound.

 

The supportive influence of outside markets, uncertainty surrounding rain totals for next week in the Midwest and higher-than-expected weekly export sales are expected to provide early strength to prices, analysts said.

 

The uncertainty of weather, with morning models in disagreement over central U.S. rains following hot weekend temperatures is seen keeping risk premium in the market, but with the leading indicators of speculative interest-precious metals-trading higher, upside movement seems to be a featured attraction, traders add.

 

However, analysts expect the market will continue its sideways volatile action, with underlying fundamentals limiting the upside while weather concerns keep a floor under prices.

 

Technical analysts say prices are still in a choppy trading range on the daily bar chart, with the next upside price objective for July soybeans are closing prices above this month's high of US$6.11. A close back below technical support at this month's low of US$5.75 1/2 would provide fresh downside technical momentum.

 

First resistance for July soybeans is seen at US$5.95 and then at US$6.00. First support is seen at US$5.89--Wednesday's low--and then at US$5.80.

 

The DTN Meteorlogix Weather Service forecast said Thursday's US and European weather models are not in good agreement, especially during the 6-10 day period. The main problem is what to do with the southern plains trough. The US model advances this feature eastward into the lower Mississippi river valley but then drifts it back westward into the southern plains. The European model stalls the weak trough over the middle and lower Mississippi river valley but then advances it eastward and weakens it. The Europe model shows mostly ridge over central US late next week while the US model still has the weak upper trough in the south-central USA.

 

In the western Midwest, scattered thunderstorms Thursday and Friday may fall in the driest areas of the western Midwest, helping to ease concerns somewhat. However, more rain will still be needed. In the eastern belt, corn and soybean development will benefit from the warmer and drier trend during the next few days, Meteorlogix said.

 

Meanwhile, USDA's weekly export sales data showed soybean sales at 383,500 metric tonnes for old-crop and 55,200 tonnes for new-crop. This compares to trader estimates of 100,000 to 300,000 tonnes. Soybean old crop export sales were 40% above the prior 4-week average. The major buyer was China. New-crop sales were primarily for China.

 

Soymeal 2005-06 sales were 182,700 tonnes, while new crop sales totaled 8,400 tonnes. Analysts estimated the sales at 50,000 to 125,000 tonnes. Soyoil sales were 3,000 tonnes, with estimates ranging from zero to 10,000 tonnes.

 

In news, India Thursday cut the base import price for palm and soy oils, according to a notice posted on the federal Finance Ministry's Web site. The base import price for crude palm oil is US$6 a metric tonne lower at US$424/tonne, while the base import price for crude soy oil has been cut by US$17/tonne to US$542/tonne, the notice said.

 

Rotterdam soybeans and soymeal prices were lower. European vegoils were flat to lower.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mixed Thursday, amid gains in Chicago Board of Trade soybean futures during electronic trade. The benchmark September 2006 soybean contract rose RMB2 to settle at RMB2,618 a metric tonne, after trading between RMB2,611/tonne and RMB2,624/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended marginally lower Thursday, amid mild downward pressure from disappointing export estimates. The benchmark August CPO contract ended at MYR1,451 a metric tonne, down MYR1 from Wednesday.