August 24, 2006

 

CBOT Soy Outlook on Thursday: Steady-firm following overnight strength

 

 

Soy complex futures at the Chicago Board of Trade are expected to trade steady to firmer Thursday, with strength expected in corn and wheat and a firmer trade in overnight action.

 

However, bearish export sales data for soybeans and larger-than-expected stocks data in the monthly crush report for soymeal and soyoil could limit gains.

 

Most-active November soybeans are called to open steady to 2 cents firmer. In e-cbot trade, November soybeans finished the overnight session 3/4 cent higher at US$5.67 1/4 a bushel. Soymeal was up 90 cents at US$163.50 a short tonne while soyoil rose 1 point to 26.10 a pound.

 

After a rally late Wednesday and the gains in overnight trade, soybeans are expected to start the day on firmer footing as gains are expected across the complex. How long that might last is debatable as news for the soybean market is neutral to bearish, analysts said.

 

While prices closed near session highs Wednesday, bears still have the technical advantage. The next downside price objective for the bears is the August low of US$5.59 1/2. Bulls will need to close above technical resistance at US$5.75 to begin to get some fresh upside technical momentum. First resistance for November soybeans is seen at US$5.69 and then at US$5.75. First support is seen at US$5.62, and then at US$5.59 1/2 - the August low.

 

The U.S. Department of Agriculture said weekly old-crop soybean export sales were 47,200 metric tonnes, a marketing-year low. This is under trade expectations for old-crop soybean business ranged 50,000 to 200,000 metric tonnes. New-crop sales were 336,300 MT tonnes, far below expectations of sales of 400,000 to 700,000 tonnes.

 

USDA put soymeal sales at 69,800 tonnes, under estimates which ranged 75,000 to 125,000 tonnes. New-crop sales were 130,200 tonnes, in the middle of trade guesses of 50,000 to 150,000 tonnes. Soyoil sales were 22,100 tonnes for old-crop, compared to estimates of zero to 20,000 tonnes. New-crops sales were 1,000 tonnes.

 

"The sales for soybeans were bearish, but good for the products. How much this might influence action is questionable because sales usually only have a short lifespan," said a floor-based broker for a commission house.

 

In other export news, South Korea bought 55,000 metric tonnes of Brazil-origin soybeans Thursday for arrival mid-September.

 

The Census bureau put the July crush at 148.5 million bushels, about where a survey of analysts estimated the crush, at 148.9 million bushels. Soyoil stocks were put at 3.121 billion pounds compared to estimates of 3.063 billion pounds. Soymeal stocks were 372,593 short tonnes, far above the analyst estimate of 296,200.

 

"The crush was in line for soybeans, but the stocks are pretty bearish. That could weigh on the products and offset any support from the export sales," the broker said.

 

Crop scouts traversing Illinois on the eastern leg of the John Deere/Pro Farmer Midwest Crop Tour saw soybean pod counts surpassed 2005 levels. Although the tour does not formulate an official estimate of soybean yield potential, crop scouts did discover that Illinois soybean fields appear to contain about 6% more pods than 2005, a finding which seemingly contradicts USDA forecasts for a 4% decline in state soy yields this season.

 

Tour members estimated 1374.7 soybean pods per square yard in Illinois, compared with 1296.8 in 2005.

 

Soybean field surveys taken along one route in the western leg produced an average pod count in a 3-foot-by-3-foot area of 1,058.5. It's a good soybean crop, but not a great one, one tour participant said. The crop tour will fan out across Minnesota on Thursday to survey corn and soybeans before concluding in Owatonna, Minn., where tour officials will issue production estimates for Iowa and Minnesota.

 

DTN Meteorologix said Midwestern rainfall during the five day period will favor filling crops but may be unfavorable for any maturing crops. There is no significant cold weather in sight. In the Delta, temperatures are expected to be not as hot and with some chance for a few thunderstorms during the next few days. Stress to filling crops may be reduced somewhat but more rain is still needed, especially over Louisiana, Mississippi and Alabama.

 

The Canadian canola crop is developing ahead of normal in all regions, due to hot, dry weather conditions over the course of the growing season, said the Canola Council of Canada in its latest crop report. Combining of early canola continued in most regions with initial yield reports ranging from 10 to 45 bushels per acre, said the Canola Council.

 

In other news, Rotterdam soymeal and soybean prices were firmer. European vegoils also were firmer.

 

Crude palm oil futures on the Bursa Malaysia Derivatives fell after an uneventful trading day as participants remained cautious ahead of the release of key export figures. November slipped MYR4 at MYR1,611 a metric tonne.

 

Soybean futures traded on China's Dalian Commodity Exchange settled mostly lower, pressured by fresh selling. January fell RMB1 to RMB2,561 a metric tonne.