July 20, 2006

  

CBOT Soy Outlook on Thursday: Up 1-2 cents, e-CBOT, stabilizing recent drop

  

 

Chicago Board of Trade soybean futures are seen starting Thursday's open auction session on firm footing, following e-CBOT theme, attempting to stabilize following losses in consecutive days.

 

Soybeans are called to open 1 to 2 cents higher.

 

In e-CBOT trade, November soybeans were 1 1/2 cents lower at US$6.08 3/4 per bushel.

 

Traders anticipate a modest bounce to start the session, supported by talk of recent declines being overdone, analysts said.

 

Speculative funds have been sellers in the market for three consecutive days, and funds usually buy or sell in three day increments, opening the door for possible upward movement if selling pressure is exhausted, said a CBOT commission house broker.

 

Otherwise, a quiet news front should keep technical factors in play, with morning forecasts unchanged as current rains and cooler temperatures are adequately factored into the market, he added.

 

Technical analysts said the market has downside technical momentum, but the market is short-term oversold, technically, and due for at least a corrective bounce soon. This month's high of US$6.39 1/2 is very strong overhead resistance for the bulls to overcome. However, Wednesday's low of US$6.01 is now some strong technical support.

 

First resistance for November soybeans is seen at US$6.10 and then at US$6.14. First support is seen at US$6.01 - Wednesday's low - and then at US$5.95.

 

The DTN Meteorlogix Weather Service forecast said thunderstorms Wednesday and overnight will help ease stress to reproductive crops in northern areas of the western Midwest. Crop conditions improve somewhat as temperatures turn cooler during the next few days across the region. In the eastern Midwest, scattered thunderstorms will break the heat in this area within the next 24-48 hours. Dryness and heat is of most concern over central and northwest Illinois. This area will see cooler temperatures and at least some thunderstorm activity during the next 24-48 hours, Meteorlogix said.

 

The U.S. Department of Agriculture said weekly export sales for soybeans were 286,000 metric tonnes, versus trade estimates of 150,000 to 400,000 tonnes. 2005-06 sales totaled 236,000 tonnes, this was 25% below the week earlier and 14% under the prior 4-week average. The biggest buyers were Japan and Netherlands. 2006-07 sales totaled 50,000 metric tonnes. Soymeal old and new crop sales were 162,900 tonnes, compared to estimates of 65,000 to 120,000 tonnes. Soyoil sales were 500 tonnes, while the trade guess was 2,000 to 6,000 tonnes.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Thursday, cash dealers said. Spot cash soybean bids were down 3 cents in Keokuk, Iowa, up 4 cents in Evansville, Ind., and up 1-cent in St. Louis, Mo., according to cash sources Thursday.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher on an upward correction Thursday, after losses in the past few days, an analyst said. The benchmark September contract settled RMB5 higher at RMB2,475 a metric tonne, after trading between RMB2,467 and RMB2,488/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply higher Thursday in unusually heavy trading, with the benchmark October contract reaching its highest level in more than 25 months. The October contract ended at MYR1,591 a metric tonne, up MYR51 from Wednesday.