August 3, 2006

 

CBOT Soy Outlook on Thursday: Down 2-4 cents on e-CBOT, private crop estimates

 

Soybean futures on the Chicago Board of Trade are seen starting Thursday's day session on the defensive, influenced by lower overnight action, with higher-than-expected private crop estimates and rains moving through the Midwest applying pressure.

 

Soybeans are called to open 2 to 4 cents lower.

 

In e-CBOT trade, November soybeans were 3 1/2-cent lower at US$5.97 3/4 per bushel.

 

The market's upside move Wednesday was a little overdone, and with private crop estimates coming in above expectations, early pressure is seen for prices, analysts said.

 

However, two-sided trade may be on tap for Thursday, as forecasts for a heat ridge to rebuild in the Midwest next week coupled with good underlying technical support is seen attracting speculative short covering, analysts added.

 

Meanwhile, market technicians said despite Wednesday's higher close, futures still have near-term downside momentum. Prices are still in the lower portion of a wide trading range over the past six months, and there is a very strong technical support zone located between US$5.85 and US$5.92 basis the November contract. The next downside price objective is closing prices below solid support at the June low of US$5.91. It will take a close above technical resistance at US$6.10 to provide better upside technical momentum.

 

First resistance for November soybeans is seen at US$6.08--Wednesday's high-and then at US$6.10. First support is seen at US$6.00 and then at US$5.96--Wednesday's low.

 

The DTN Meteorlogix forecast calls for showers and thunderstorms to move southeastward through the central and eastern Midwest during the next two days. Rainfall with these storms may total up to three-quarters of an inch in Illinois, and more than one inch in the Ohio Valley.

 

Beginning late this coming weekend and continuing through next week, forecast weather charts are keeping up with the idea that hot weather will rebuild in the Midwest, promoting another round of above-normal temperatures and below-normal rainfall, Meteorlogix forecasts. This return of the heatwave during the next 7-10 days will deplete soil moisture and again increase stress on filling corn and soybeans, Meteorlogix added.

 

FC Stone released its August 1 U.S. production estimates late Wednesday. FC Stone forecast the 2006-07 soybean crop at 3.056 billion bushels with a yield of 41.3 bushels an acre. In the July supply and demand report, the U.S. Department of Agriculture estimated U.S. soybean production at 3.010 billion bushels and a trendline yield of 40.7 bushels per acre. On August 11, the USDA is scheduled to release its first U.S. soybean estimates using field surveys.

 

USDA said weekly export sales for soybeans were 270,300 metric tonnes, versus trade estimates of 150,000 to 400,000 tonnes. 2005-06 sales totaled 177,300 tonnes, 11% below the week earlier and 27% under the prior 4-week average. The biggest buyers were Mexico and Taiwan. 2006-07 sales totaled 93,000 metric tonnes. Soymeal old and new crop sales were 110,200 tonnes, compared to estimates of 80,000 to 135,000 tonnes. Soyoil sales were 100 tonnes, while the trade guess was zero to 6,000 tonnes.

 

The U.S. Census Bureau revised its June soyoil stocks figure, raising the June stocks figure to 2.912 billion pounds from the 2.906 billion pounds originally reported July 27. The figure is up from May's stocks of 2.885 billion pounds and well above the 1.838 billion pounds reported at the same time last year.

 

In deliveries, a total of 1,334 delivery notices were posted against the August soybean future. The last trade date assigned was August 2. 294 delivery notices recirculated against the August soymeal contract. The last trade date assigned was July 31. August soyoil delivery intentions totaled 138 lots. The last trade date assigned was August 1.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly higher as domestic soybean output may drop this year, an analyst said. The benchmark September contract settled RMB15 higher at RMB2,415/tonne, after trading between RMB2,404 and RMB2,429/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended a tad lower Thursday after a volatile trading day as the market struggled for direction. The benchmark October CPO contract ended at MYR1,641 a metric tonne, down MYR2 from Wednesday.