October 5, 2006

 

CBOT Soy Outlook on Thursday: Up 1-2 cents; outside markets, exports support

 

 

Traders at the Chicago Board of Trade said soybean futures are poised to start on firm footing Thursday, garnering support from solid weekly export sales and strength from outside markets.

 

Soybean futures are called to open 1 to 2 cents higher.

 

In e-CBOT trade, November soybeans were 3/4-cent higher at US$5.56 per bushel.

 

Confirmation of strong demand for soybeans, early strength in outside markets and higher calls in the neighboring wheat market are expected to provide support and keep sellers nervous in the early going, analysts said.

 

The market will be looking for follow through buying from Wednesday's advances, but if buying interest is exhausted quickly downside movement could emerge, said a CBOT broker.

 

Technical strength has surfaced, but bearish fundamentals remain a hindrance to upward movement, as hedge related pressure is expected to filter into the market on rallies, traders added.

 

A market technician said if there is follow-through buying from Wednesday's gains on Thursday or Friday, then odds would be high that a harvest low is in place and that prices can begin to work higher into the end of the year. It will take a close above solid technical resistance at Wednesday's high of US$5.62 basis November soybeans to provide better 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$5.62 and then at US$5.65. First support is seen at US$5.50 and then at US$5.45.

 

U.S. Department of Agriculture said net weekly export sales for soybeans were 1,254,800 metric tonnes. 2006-07 sales were 1,194,800 tonnes, 38% higher than the previous week. Trade estimates called for commitments in the 600,000 to 900,000 tonne range. The biggest buyers were China, buying 570,900 tonnes, and unknown destinations with 155,200 tonnes. Soymeal old and new crop sales were 148,000 tonnes, compared to estimates of 75,000 to 225,000 tonnes. Soyoil sales were 11,300 tonnes, while the trade guess was zero to 17,000 tonnes.

 

The DTN Meteorlogix weather forecast says a drier weather pattern favors harvest activities through west and central locations of the U.S. Midwest for the next 10 days. The eastern belt harvest may continue at a slower pace due to prior rains in the area but major delays are not expected.

 

Mainly dry conditions are on tap for the western Midwest Thursday through Saturday. Temperatures will average below normal Thursday, near normal Friday, and above normal Saturday. In the eastern Midwest, there a chance for a few light showers near or south of the Ohio River Thursday, but dry elsewhere in the region. Mainly dry conditions are on tap for Friday and Saturday. Temperatures will average below normal Thursday and Friday, near to above normal west and below normal east Saturday, Meteorlogix forecasts.

 

Informa Economics estimated 2006-07 U.S. soybean production at 3.206 billion bushels with a yield of 43.4 bushels per acre. In September, USDA estimated U.S. soybean production at 3.093 billion bushels using a yield of 41.8 bushels per acre. On October 12, USDA is scheduled to release its next U.S. soybean production estimates at 7:30 a.m. CDT (1230 GMT).

 

The U.S. Census Bureau revised its August soyoil stocks figure, raising the August stocks figure to 3.042 billion pounds from the 3.035 billion pounds originally reported Sept. 28. The figure is down from July's stocks of 3.106 billion pounds but well above the 1.727 billion pounds reported at the same time last year.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Thursday. Spot cash soybean bids were down 2 cents in Keokuk, Iowa, down 5 cents in Peoria, Ill., and down 1-cent in St. Louis, MO, according to cash sources Thursday.

 

Rotterdam soybeans and soymeal were mostly higher. European vegoils were mixed.

 

In overseas markets, Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Thursday, rebounding from recent losses in tandem with a recovery in crude oil. The benchmark December contract ended at MYR1,537 a metric tonne, up MYR14 from Wednesday after moving between MYR1,530 and MYR1,543/tonne.