June 28, 2007

 

CBOT Soy Outlook on Thursday: Firmer; e-CBOT, pre-report positioning

 

 

Soybean futures on the Chicago Board of Trade are expected to start Thursday's session firmer, in tune with overnight trade, as traders position themselves ahead of Friday's crop reports.

 

CBOT soybean futures are called to start the session 1 to 2 cents higher.

 

In overnight e-CBOT trading, July soybeans were 2 cents higher at US$8.05 1/2 per bushel, and November was 1 3/4 cents higher at US$8.39 1/4.

 

Preparation for Friday's crop reports will once again dominate activity, with overnight price strength in Asian soybean and palm oil futures expected to lend support to futures, analysts said.

 

Futures are seen remaining range bound, with the ability of prices to hold major chart support and bullish long term fundamentals keep a floor under prices, analysts added.

 

Otherwise, favorable near term weather will apply light pressure, but with uncertainty tied to longer range forecasts, traders expect prices to chop around in its recent range until Friday's reports, month end and quarter end positioning is completed, a CBOT floor analyst said.

 

A market technician said no serious chart damage has occurred from the recent sell- off, but the bulls have faded. There is now the specter of a bear flag forming on the daily bar chart. The next upside price objective for November soybeans is closing prices above solid technical resistance at US$8.47 1/2, which would fill on the upside last week's downside price gap on the daily bar chart. The next downside price objective is closing prices below solid support at last week's low of US$8.25.

 

First resistance for November soybeans is seen at Wednesday's high of US$8.45 1/2 and then at US$8.47 1/2. First support is seen at Wednesday's low of US$8.28 1/2 and then at US$8.25.

 

The Census Bureau reported soybean crushings in May totaled 151.8 million bushels. The figure was above the average survey estimate of 150.5 million bushels, up from April's 144.9 million and above last year's 135.5 million. Soyoil stocks dropped to 3.266 billion pounds from April's 3.290 billion. The average of survey estimates was 3.321 billion pounds. Soymeal stocks were reported at 277,581 short tonnes. The stock figure was down from April's 328,585 and below the average estimate of 315,400 thousand tonnes.

 

The U.S. Department of Agriculture reported weekly soybean export sales were 247,900 metric tonnes for the week ended June 21. Included in the total were sales of 239,800 metric tonnes for the 2006-07 marketing year. The 2006-07 sales were primarily for Japan with 75,200 metric tonnes, Mexico with 69,200 tonnes and China with 64,400 tonnes. Analysts had forecast sales between 100,000 and 450,000 metric tonnes. Soymeal sales were a net 78,300 tonnes, and soyoil commitments were 30,600 metric tonnes.

 

USDA is scheduled to release its annual acreage and quarterly grain stock reports Friday at 8:30 a.m. EDT. The average of 20 analysts' estimates pegged 2007 soybean acreage at 67.838 million acres, up from the prospective planting figure of 67.140 million. The average was from a range of 66 million to 69 million acres. Quarterly grain stocks were pegged at 1.076 billion bushels from a range of 909 million to 1.120 billion. Fifteen analysts participated in the stocks survey.

 

The DTN Meteorlogix Weather Service forecast said hot weather early next week in the western Midwest is not expected to last long enough to significantly impact crops. However, the drying trend may continue for the central Minnesota region. In the eastern Midwest, a few more significant thundershowers in some dry areas yesterday improved the outlook for this part of the crop. The extended outlook sees only hot weather briefly.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended higher Thursday, boosted by short covering and late speculative buying amid an optimistic outlook for demand in the coming months. The benchmark September contract ended at MYR2,383 a metric tonne, up MYR49 from Wednesday.

 

On Singapore's Joint Asian Derivatives Exchange, CPO futures also rose, with September up US$17 to end at US$689.50/tonne.

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Thursday on reports that some traders are taking delivery of soybeans from the exchange's warehouses. The benchmark January 2008 soybean No.1 contract settled RMB7 higher at RMB3,212/tonne.