June 30, 2006

 

CBOT Soy Outlook on Friday: Up 4-6 cents; outside markets; grain stocks, weather

 

 

Soybean futures on the Chicago Board of Trade are seen opening higher Friday, buoyed by weather outlooks for next week, strength in outside inflationary markets and supportive acreage and stocks data from U.S. Department of Agriculture.

 

Soybeans are called to open 4 to 6-cents higher.

 

The USDA's acreage and stocks data at the low end of estimates will provide underlying support, with concerns over potential heat and dryness in long range forecasts for the western Midwest and the bullish influence of outside markets attracting speculative buyers, said Mike Zuzolo, senior analyst with Risk Management Commodities in Lafayette, Ind.

 

"The Federal Reserves move to only raise rates 25 basis points should leave commodities very well supported as a whole, knowing that liquidity isn't going to be sucked out of the market by Fed policy being to hawkish," said Zuzolo.

 

Meanwhile, traders say technical factors will play a key role in price movement, with weather concerns heading into the weekend encouraging participants to add risk premium to prices.

 

Technical analysts said market bulls are clawing back this week, after Monday's big gap down losses. Some chart damage has been repaired, but it will take a close back above resistance at US$6.20 a bushel to provide better upside technical momentum.

 

First resistance for November soybeans is seen at US$6.12 1/2--Thursday's high--and then at US$6.15. First support is seen at US$6.08--Thursday's low--and then at US$6.05.

 

The DTN Meteorlogix Weather Service forecast said Friday's US and European models are in fair to good agreement. The western US ridge that has been building northward and eastward during the past couple of days is expected to get pushed back south and west during the weekend and early next week as a strong trough moves through western Canada before dropping southward into the Midwest early next week.

 

The ridge is then expected to build back towards the north and east during the last part of next week and next weekend. The US model shows this ridge as far east as the central plains while the European Model brings it as far east as the western Midwest. Also, the US model shows a stronger center on this ridge when it is over western plains next Thursday and Friday as compared to the European model. This ridge will again be in a position to push hot/dry weather northward into the north plains and southeast Canadian Prairies and some of this hot weather may also impact the northwest Midwest, Meteorlogix said.

 

USDA said 2006 U.S. soybean planted acreage totaled 74.9 million acres, up 4% from last year, but down 3% from the USDA's planting intentions estimate of 76.895 million acres. Traders anticipated the figure would fall within a range of 74.2 to 76.5 million. June 1 stocks were pegged at 990 milion bushels, below the average trade estimate of 1.012 billion and near the low end of the range that span from 971 million to 1.041 billion.

 

The Kaosiung branch of Taiwan's Breakfast Soybean Procurement Association, or BSPA, has rejected bids in a tender to purchase 30,000-60,000 metric tonnes of Brazil or U.S.-origin soybeans, a trader in Taipei said Friday.

 

In deliveries, a total of 2,176 delivery notices were posted against the July soybean future. The house account at Term Commodities issued 1,100 notices and the customer account at RJ O'Brien issued 782. The last trade date assigned was June 28. A total of 1,552 delivery notices were posted against July soyoil, with the house account at Term Commodities issuing 930 lots and the house account at ADM Investor Services a stopper of 403 lots. 711 delivery notices were posted against the July soymeal contract with the house account at Bunge Chicago the principle issuer of 500 lots. The trade date assigned was April 27.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Friday, cash dealers said. Spot cash soybean bids were up 1-cent in Keokuk, IA, up 4 1/2-cent in Peoria, Ill, and down 2-cent in St. Louis, according to cash sources Friday.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Friday, on the heels of overnight gains in Chicago Board of Trade soybean futures, amid jumps in other local commodities futures. The benchmark September contract rose RMB13 to settle at RMB2,588 a metric tonne, after trading between RMB2,580/tonne and RMB2,596/tonne. Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Friday on gains in overnight soyoil futures and short-covering. The benchmark September CPO contract ended at MYR1,491 a metric tonne, up MYR14 from Thursday.