September 14, 2006

 

CBOT Soy Outlook on Thursday: Up 2-4 cents, e-CBOT, extending recovery

 

 

Soybean futures on the Chicago Board of Trade are seen starting Thursday's day session on firm footing, following the overnight tone, as the market extends its bounce from contract lows.

 

In e-CBOT trade, November soybeans were 3 3/4 cents higher at US$5.44 1/4 per bushel. Soybean futures are called to open 2 to 4 cents higher.

 

The market is poised to continue the overnight theme, as the exhaustion of aggressive speculative sales recently coupled with supportive weekly export sales and strength in outside markets serve as catalysts for a price bounce, analysts said.

 

The absence of farmer selling at current levels leaves downside momentum in speculative fund seller's hands, but their absence in recent sessions has allowed futures to find some stability, traders added. Underlying concerns over the potential for frost or freezing temperatures to move into the northern Midwest next week is seen keeping some sellers sidelined as well.

 

However, bearish fundamentals remain the drawing card of the market, as analysts anticipate upside movement will remain limited, with rallies continuing to attract hedges as the harvest approaches.

 

A market technician said despite Wednesday's tepid short covering bounce bearish momentum is still in technical control. The next downside price objective for November soybeans is solid support at US$5.25. Seasonality studies do show soybean prices bottoming out in the October timeframe and then working higher into the end of the year, but it will take a close above technical resistance at the September high of US$5.63 to begin to provide some fresh upside technical strength.

 

First resistance for November soybeans is seen at US$5.45 and then at US$5.49 - this week's high. First support is seen at US$5.37 1/2 - the contract low - and then at US$5.35.

 

U.S. Department of Agriculture said net weekly export sales for 2006-07 soybeans were 741,100 metric tonnes, 32% higher than the previous week. Trade estimates called for commitments in the 400,000 to 500,000 tonne range. The biggest buyers were China, buying 311,000 tonnes, and Mexico with 131,900 tonnes. Soymeal old and new crop sales were 106,200 tonnes, compared to estimates of 75,000 to 175,000 tonnes. Soyoil sales were 3,200 tonnes, while the trade guess was zero to 20,000 tonnes.

 

The National Oilseed Processors Associated reported its members crushed 134.7 million bushels of soybeans during August. The figure was on par with the average trade estimate of 135 million bushels and below the 142.6 million NOPA reported for the month of July. The cumulative crush for the year is reported at 1.535 billion bushels compared to 1.503 reported through August of 2005. Soyoil stocks declined to 2.678 billion pounds, down from 2.688 billion in July. The average of trade estimates projected stocks at 2.698 billion pounds.

 

The DTN Meteorlogix weather forecast says more wet weather is possible in the Midwest this weekend followed by some fairly cool air. This is an unfavorable weather pattern for maturing crops and early harvests. Temperatures will average below or much below normal Tuesday, with the lowest temperatures ranging from the 30s to the middle 40s degree Fahrenheit during Tuesday and Wednesday mornings, Meteorlogix reports.

 

In deliveries, a total of 332 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. 13. 62 delivery notices recirculated against September soyoil. The last date trade assigned was Sept. 13. In soymeal, 31 delivery notices were posted against the September contract. The last trade date assigned was Sept. 12.

 

Rotterdam soybeans and soymeal were flat to mixed. European vegoils were mixed.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly higher Thursday as prices of soymeal and soyoil in soybean-producing regions rose, analysts said. The most active January 2007 contract settled RMB18 higher at RMB2,556 a metric tonne, after trading between RMB2,548/tonne and RMB2,562/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Thursday, snapping a four-day losing streak as the market trailed broader gains in other commodities such as crude oil. The benchmark November contract ended at MYR1,537 a metric tonne, up MYR10.