July 12, 2007

 

CBOT Soy Outlook on Thursday: Up 5-7 cents; bullish trend, weather

 

 

Chicago Board of Trade soybean futures are seen starting Thursday's day session firmly, continuing its bullish trend, as supportive weather and technicals overshadow neutral U.S. Department of Agriculture data.

 

CBOT soybean futures are called to start the session 5 to 7 cents higher.

 

Price action should follow the overnight trend, with weather the focus of the market following a lack of surprises in Thursday's supply and demand report, said Mike Zuzolo, analyst with Risk Management Commodities Inc. in Lafayette, Ind.

 

The trend remains higher, and with the soybean crop susceptible to fresh weather market scares, and extended weather forecasts favoring bulls, buyers remain in command, analysts said.

 

Overnight price action produced new contract highs, and should lead prices higher, traders said. However, with supportive longer range forecasts dialed into prices, overbought technical signals may trigger profit taking without any fresh support from the USDA report, a CBOT floor trader said.

 

A market technician said market bulls have the strong technical advantage and are looking for more on the upside in the near term. The next upside price objective for November soybeans is closing prices above solid technical resistance at US$9.50. The next downside price objective is closing prices below solid support at US$8.90.

 

First resistance for November soybeans is seen at Wednesday's contract high of US$9.26 and then at US$9.35. First support is seen at Wednesday's low of US$9.18 1/4 and then at US$9.07.

 

The USDA estimated 2007-08 soybean ending stocks at 245 million bushels, down 75 million from June, but above the average of estimates at 221 million. USDA said lower production and reduced carry in supplies resulted in the decline.

 

Exports were pegged at 1.020 billion bushels, down 60 million from June, and the crush was estimated at 1.800 billion, up 10 million from June. USDA reported 2007-08 soybean production at 2.625 billion bushels, down 120 million from the June estimate.

 

USDA trimmed 2006-07 ending stocks by 10 million bushels to 600 million. The crush was raised 10 million to 1.780 billion, reflecting stronger than expected domestic soymeal disappearance through May. Exports were raised 10 million and seed and residual was cut 10 million resulting in the 10 million bushel drop in carryout.

 

Global soybean production for 2007-08 is projected at 222.05 million tonnes, down from the June production estimate of 225.32 million.

 

The U.S. Department of Agriculture reported weekly soybean export sales were 184,000 metric tonnes for the week ended July 5. Included in the total were sales of 144,900 metric tonnes for the 2006-07 marketing year. The 2006-07 sales were primarily for China with 59,700 metric tonnes, and Japan with 51,300 tonnes. Analysts had forecast sales between 100,000 and 250,000 metric tonnes. Soymeal sales were a net 73,100 tonnes, and soyoil commitments were 9,300 metric tonnes.

 

The DTN Meteorlogix Weather Service forecast said Dry conditions with only a few very light showers are seen for Thursday through Saturday in the western Midwest. Temperatures will average below normal Thursday, near to below normal Friday, and near to above normal Saturday. Mainly dry conditions are expected Sunday, while only a few afternoon showers are possible Monday. Temperatures will average above normal, with high temperatures in the 80s and low 90s Sunday, upper 80s to middle 90s Monday.

 

In the eastern Midwest, dry conditions are on tap for Thursday, with dry weather only a few light showers, favoring the east, seen for Friday and Saturday. Temperatures will average below normal Thursday and Friday, near to below normal Saturday. Mainly dry conditions are expected Sunday, with only a few light showers seen Monday, Meteorlogix forecasts.

 

Deliveries notices posted against July soybean futures totaled 2,384 lots. A customer account at Man Professional Clearing issued 848 lots, and stopped 584 lots. The last trade date assigned was July 11.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended higher Thursday to reach a fresh five-week high as persistent concerns about falling world edible oil production kept the market on an uptrend. The benchmark September contract ended at MYR2,615 a metric tonne, up MYR31 from Wednesday.

 

On Singapore's Joint Asian Derivatives Exchange, CPO futures ended higher, with the September contract up US$3 at US$750.00/tonne.

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Thursday after soybean contracts at CBOT set new record highs for the third session in a row Wednesday. The benchmark January 2008 soybean contract settled RMB40 higher at RMB3,368 a metric tonne.