August 17, 2006

 

CBOT Soy Outlook on Thursday: Up 1-2 cents; e-CBOT, export sales, oversold

 

 

Soybean futures on the Chicago Board of Trade are expected to start Thursday's day session on firmer footing, following the overnight theme, with strong weekly export sales and oversold conditions underpinning prices.

 

Soybeans are called to open 1 to 2 cents higher.

 

In e-CBOT trade, November soybeans were 1 1/4-cent higher at US$5.66 1/4 per bushel.

 

The market is poised to pick up where overnight action left off, with solid export demand seen attracting consolidative action amid the oversold conditions that exist in the market, said a CBOT commission house broker.

 

The sales figure serves as confirmation that recent price declines have attracted importers to the U.S., with analysts saying U.S. prices have fallen to a level that make abundant U.S. supplies very competitive in world markets.

 

However, bearish underlying fundamentals, with favorable Midwest weather conditions promoting higher yield and production forecasts continues to attract sellers on price rallies is expected limit upside potential, said a CBOT floor analyst.

 

Meanwhile, a technical analyst said the market continues to display bearish technical momentum, with prices closing at their lowest levels in 18 months and scoring a bearish "outside day" down on the daily bar chart Wednesday. The next downside price objective for November soybeans is solid technical support at US$5.50. It will take a close above technical resistance at US$5.80 to begin to provide some fresh upside technical momentum, he added.

 

First resistance for November soybeans is seen at US$5.73 - Wednesday's high - and then at US$5.80. First support is seen at US$5.64 - Wednesday's low and this week's low - and then at US$5.60.

 

U.S. Department of Agriculture said weekly export sales for soybeans were 712,400 metric tonnes, versus trade estimates of 350,000 to 600,000 tonnes. Sales in 2005-06 totaled 257,600 tonnes. Sales in 2006-07 totaled 454,800 metric tonnes, with the principle buyer being China with 226,000 metric tonnes. Soymeal old and new crop sales were 258,200 tonnes, compared to estimates of 75,000 to 180,000 tonnes. Soyoil sales were 1,000 tonnes, while the trade guess was zero to 10,000 tonnes.

 

The DTN Meteorlogix forecast said episodes of scattered showers and thundershowers are on tap for the western Midwest Thursday and Friday, with dry conditions or only a few light showers expected Saturday. Rainfall potential during this period is 0.30-1.50 inches, favoring central and southern locations. Temperatures average near to below normal during this period, Meteorlogix forecasts.

 

In the eastern Midwest, there is a chance for scattered thunderstorms through the northwest part of the region during Thursday, with scattered showers and thunderstorms through most of the area Friday into Saturday. Rainfall potential during this period is 0.30-1.50 inches, with temperatures averaging near to above normal in the south and near to below normal north, Meteorlogix reported.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Thursday, in line with Wednesday's losses at CBOT, analysts said. The most active January 2007 contract settled RMB1 lower at RMB2,535 a metric tonne, after trading between RMB2,521 and RMB2,543/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply lower Thursday as the market continued its retreat from an earlier market rally considered overdone. The benchmark November CPO contract ended at MYR1,586 a metric tonne, down MYR41 from Wednesday, after touching a low of MYR1,577/tonne.