October 13, 2006

 

CBOT Soy Outlook on Friday: Up 1-2 cents; e-CBOT, corn, wheat influence

 

 

Soybean futures on the Chicago Board of Trade are seen beginning Friday's day session with modest gains, feeding off the overnight theme accompanied by spillover support from expected gains in corn and wheat.

 

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

 

In e-CBOT trade, November soybeans were 1 1/2 cents higher at US$5.81 1/4 and January was 3/4-cent higher at US$5.95 1/4 per bushel. The market is poised to experience some follow through buying from prior gains, continuing its counter seasonal advances, said Dax Wedemeyer, analyst with U.S. Commodities in West Des Moines, Iowa.

 

The market will continue to be influenced by movements in corn and wheat, with firm outside markets and lingering support from smaller than expected increases in Thursday's production and yield forecasts providing underlying strength, analysts add.

 

A higher than anticipated weekly export sales figure and rumors of South Korea tendering for U.S. soymeal are seen as friendly features for the market, traders said.

 

However, the market might see some end of the week profit taking surface to trim the advances after the early buying is exhausted, as the market still posses a bearish supply side fundamental outlook, Wedemeyer added.

 

A market technician said upside momentum gained near-term technical power Thursday, but the mid-range close does hint that buying interest maybe getting exhausted at higher price levels. Thursday's high of US$5.90 basis November futures is now strong overhead resistance. The next downside price objective is closing prices below solid support at US$5.60.

 

First resistance for November soybeans is seen at US$5.85 and then at US$5.90. First support is seen at US$5.75 and then at Thursday's low of US$5.70.

 

U.S. Department of Agriculture said net weekly export sales for soybeans were 1,086,100 tonnes, 9% lower than the previous week, but 22% above the 4-week average. Trade estimates called for commitments in the 700,000 to 900,000 tonne range. The biggest buyers were China, buying 500,800 tonnes, and unknown destinations with 198,400 tonnes. Soymeal 2006-07 marketing year sales were 101,400 tonnes, compared to estimates of 75,000 to 175,000 tonnes. Soyoil 2006-07 sales were 2,400 tonnes, while the trade guess was zero to 10,000 tonnes.

 

The DTN Meteorlogix weather forecast says cold and dry weather during the next 48 hours in the US Midwest will improve harvest conditions. However, as temperatures moderate early next week some wet weather develops to disrupt the harvest. Additional rainfall is expected during the middle of next week out ahead of another cold air mass expected later next week, Meteorlogix reports.

 

In deliveries, a total of 190 delivery notices were posted against the October soyoil future. A customer account at Tenco issued 183 lots with the house account at ADM Investor Services the primary stopper of 149 lots. The last trade date assigned was October 10.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly up Friday, due to Thursday's gains in CBOT soybean futures, traders said. The benchmark January 2007 contract gained RMB19 to settle at RMB2,553 a metric tonne, after trading between RMB2,548/tonne and RMB2,560/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Friday, with the benchmark contract breaking a key resistance level to touch a one-and-a-half-month high. The benchmark December contract ended at MYR1,576 a metric tonne, up MYR16 from Thursday.