July 13, 2006

 

CBOT Soy Outlook on Thursday: Down 5-7 cents on technicals, bearish supplies

 

 

Soybean futures on the Chicago Board of Trade are seen starting Thursday's session on the defensive, in tune with the overnight theme as technical weakness and bearish supply outlooks weigh on prices, analysts said.

 

Soybeans are called to open 5 to 7 cents lower.

 

In e-CBOT trade, November soybeans slid 7 3/4 cents at US$6.21 3/4 per bushel.

 

The market is set to start lower, with technical weakness from Wednesday, negative supply outlooks, a less threatening weather outlook and weakness in the cash market combine to weigh on prices, said Don Roose president U.S. Commodities in West Des Moines, Iowa.

 

The heat wave moving into the Midwest looks to be only a couple of days event, with the U.S. weather model projecting the heat ridge backing off early next week, and with crop loans coming due, the cash market will stay weak as fresh supplies filter into the pipeline, Roose adds.

 

Technical analysts said this week's high of US$6.39 1/2 is very strong overhead resistance for November futures to overcome. The market will have to push prices above that level to gain any fresh upside technical momentum. The next downside price objective for November beans is filling an upside price gap on the daily bar chart - meaning pushing prices below US$6.12 1/2.

 

First resistance for November soybeans is seen at US$6.36 - Wednesday's high - and then at US$6.39 1/2 - this week's high - and then at US$6.48 1/2 - the January high. First support is seen at US$6.25 and then at US$6.22 - Wednesday's low.

 

The DTN Meteorlogix Weather Service forecast said morning weather models are in fair to good agreement during the next eight days and then they begin to disagree. The western ridge is expected to strengthen and build towards the Midwest during Thursday through Saturday. This ridge may weaken and back off slightly early next week as a short wave trough passes by but then it strengthens again and moves back towards the Midwest during the middle of the week. The European model maintains a strong ridge center over the central U.S. which includes the southwest Midwest, through the end of the 10-day period.

 

The hottest weather of the season to date will cover the entire Midwest during the weekend through the middle of next week. It also means that there may be some temperature relief and possibly some thunderstorm activity very late next week or next weekend, Meteorlogix said.

 

The U.S. Department of Agriculture said 2005-06 weekly export sales for soybeans were 316,400 metric tonnes, versus trade estimates of 200,000 to 350,000 tonnes. This was 48% above the week earlier and 9% over the prior 4-week average. The biggest buyers were China, and Taiwan. 2006-07 sales totaled 33,200 metric tonnes. Soymeal old and new crop sales were 57,600 tonnes, compared to estimates of 60,000 to 120,000 tonnes. Soyoil sales were 300 tonnes, while the trade guess was zero to 10,000 tonnes.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Thursday, cash dealers said. Spot cash soybean bids were down 5 1/2 cents in Peoria, Ill., and down 5 cents in St. Louis, according to cash sources Thursday.

 

In deliveries, a total of 950 delivery notices were redelivered against the July soybean future. The house account at Term Commodities topped 235 lots. The last trade date assigned was July 12. A total of 11 delivery notices were posted against July soyoil. The last trade date assigned was July 5. A total of 80 delivery notices were posted against July soymeal. The house account at ADM Investor Services stopped all 80. The last trade date assigned was June 30.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Thursday on an oversupply in the local market and losses in Chicago Board of Trade soybean futures Wednesday, analysts said. The benchmark September contract fell RMB17 to settle at RMB2,512 a metric tonne, after trading between RMB2,500 and RMB2,523/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended mixed after a choppy trading day Thursday as downward pressure from high stocks was countered by optimism about biodiesel growth. The benchmark September CPO contract ended at MYR1,492 a metric tonne, up MYR1 from Wednesday, after moving between MYR1,484 and MYR1,500/tonne.