September 28, 2006

  

CBOT Soy Outlook on Thursday: Up 1-2 cents; e-CBOT, underlying demand

 

 

Soybean futures on the Chicago Board of Trade are expected to start Thursday's day session on firmer footing, following the overnight price theme, with underlying demand providing support.

 

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

 

The market is poised to start modestly higher, benefiting from pre crop report positioning and signs of good underlying demand from export sales and Census crush reports, analysts said.

 

However, traders say the market is going nowhere fast, hovering within a range as bearish yield and supply forecasts remain hindrances to upside potential. On the flip side, the market is heavily short and without a pick up in farmer selling downside pressure seems limited as well, said a CBOT commission house broker.

 

A technical analyst said it will take a close above technical resistance at the September high of US$5.63 in November soybeans to provide some fresh upside technical momentum. The next downside price objective is closing prices below solid support at the contract low of US$5.37 1/2.

 

First resistance for November soybeans is seen at US$5.48--Wednesday's high--and then at US$5.50 1/4--this week's high. First support is seen at US$5.42--Wednesday's low-and then at US$5.40.

 

U.S. Department of Agriculture said net weekly export sales for 2006-07 soybeans were 866,600 metric tonnes, 15% higher than the previous week. Trade estimates called for commitments in the 500,000 to 800,000 tonne range. The biggest buyers were China, buying 241,300 tonnes, and South Korea with 144,000 tonnes. Soymeal old and new crop sales were 228,600 tonnes, compared to estimates of 75,000 to 200,000 tonnes. Soyoil sales were 8,400 tonnes, while the trade guess was zero to 10,000 tonnes.

 

The Census bureau put the August crush at 142.0 million bushels, slightly above where a survey of analysts estimated the crush, at 141.1 million bushels. Soyoil stocks were put at 3.035 billion pounds compared to estimates of 3.120 billion pounds. Soymeal stocks were 202,171 short tonnes, well below the analyst estimate of 257,800.

 

The USDA is scheduled to release its quarterly grain stocks report Friday 7:30 a.m. CDT (1230 GMT). The average of analysts' guesses surveyed by Dow Jones estimate 4th quarter soybean usage around 508 million bushels, bringing stocks down to 482 million bushels. Estimates ranged from 460 million to 492 million.

 

The DTN Meteorlogix weather forecast says harvest conditions should improve over the west and central belt, however rainfall in the eastern belt may keep this portion of the harvest slow.

 

Mainly dry conditions are forecast for Thursday in the western Midwest, with a chance for a little light rain or drizzle in northern areas overnight. Mainly dry conditions are expected Friday and Saturday. In the eastern belt, sprinkles and a few light showers may linger Thursday through southeastern and far eastern areas of the belt. Mainly dry conditions are in store for Friday, with a chance for a little light rain or drizzle through northern and eastern areas during Saturday, Meteorlogix forecasts.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Thursday. Spot cash soybean bids were down 1-cent in Keokuk, IA, down 25 cents in Bloomington, Ill., and down 6 cents in St. Louis, MO., according to cash sources Thursday.

 

Rotterdam soybeans and soymeal were mostly lower. European vegoils were flat to lower.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mixed Thursday. The benchmark January 2007 contract settled unchanged at RMB2,535 a metric tonne, after trading between RMB2,530/tonne and RMB2,538/tonne.

 

Crude palm oil futures continued to rise on the Bursa Malaysia Derivatives Thursday, supported by strong technical factors. The benchmark December contract finished MYR10 higher at MYR1,550/tonne.