September 8, 2006

 

CBOT Soy Outlook on Friday: Steady, lower; fundamentals weigh

 

 

Soybean futures on the Chicago Board of Trade are seen starting Friday's day session with a steady to lower feel, as the market remains under the weight of large production and supply forecasts.

 

Soybeans are called to open steady to 1-cent lower.

 

In e-CBOT trade, November soybeans were 1-cent lower at US$5.49 per bushel.

 

A quiet news front is expected to promote a choppy atmosphere as traders continue to buy breaks and sell rallies, said Jason Roose of U.S. Commodities.

 

The market is awaiting the government's production report next week, but with harvest approaching and big crop outlooks traders are keying on contract lows resting beneath the market, while end users are eyeing price breaks to cover nearby needs, Roose added.

 

Light pre weekend consolidation is seen providing some strength, but without any fresh supportive fundamentals, upside movement is expected to remain limited.

 

Bearish momentum still has a solid near-term technical advantage, with the next downside price objective for November soybeans the technical support at US$5.25, a market technician said. It will take a close above technical resistance at US$5.70 to begin to provide the some fresh upside technical momentum, he added.

 

First resistance for November soybeans is seen at US$5.52 1/2--Thursday's high--and then at US$5.57. First support is seen at US$5.43 1/4--Thursday's low--and then at US$5.40.

 

The DTN Meteorlogix forecast said wet weather returns to the U.S. Midwest during the next few days. This may delay fall field work in some locations. Long range charts suggest a chance for much cooler weather in the western belt very late next week.

 

U.S. Department of Agriculture said net weekly export sales for 2006-07 soybeans were 559,800 metric tonnes, versus trade estimates of 400,000 to 600,000 tonnes. The biggest buyer was China buying 230,000 tonnes. Soymeal old and new crop sales were 115,000 tonnes, compared to estimates of 75,000 to 250,000 tonnes. Soyoil sales were 30,600 tonnes, while the trade guess was zero to 25,000 tonnes.

 

Meanwhile, the average of analysts estimates taken from a survey compiled by Dow Jones Newswires for 2006-07 U.S. soybean production based on conditions as of Sept. 1 pegs the crop at 3.093 billion bushels. The estimates ranged from 2.994 billion bushels to 3.192 billion bushels. The 2005-06 ending stocks were pegged at 503 million bushels from estimates that ranged from 485 million to 523 million bushels. The average of estimates pegged 2006-07 ending stocks at 566 million bushels. The estimates ranged from 460 million to 696 million bushels.

 

USDA is scheduled to release its September production report at 7:30 a.m. CDT (1230 GMT) on Tuesday.

 

In deliveries, a total of 1,723 delivery notices were posted against the September soybean future. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was Sept. 7. 252 delivery notices recirculated against September soyoil. The last date trade assigned was Sept. 7. In soymeal, 79 delivery notices were posted against the September contract. The last trade date assigned was August 31.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Friday. Spot cash soybean bids were up 15 cents in Cedar Rapids IA, up 12 cents in Peoria Ill., and up 3 cents in St. Louis MO, according to cash sources Friday.

 

Rotterdam soybeans and soymeal were higher. European vegoils were steady to higher.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly higher Friday, supported by Thursday's CBOT gains and an early frost in major producing regions, analysts said. The most active January 2007 contract settled RMB6 higher at RMB2,552 a metric tonne, after trading between RMB2,546 and RMB2,557/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Friday, pressured by weakness in crude oil prices and concerns about a slowdown in exports. The benchmark November CPO contract ended at MYR1,553 a metric tonne, down MYR17 from Thursday.