October 14, 2005

 

CBOT Soy Outlook on Friday: Up 2-4 cents; e-CBOT, seasonal buying

 

 

Soybean futures on the Chicago Board of Trade are expected to start Friday's session on firm footing, following the overnight trend, staging a seasonal rally, traders said.

 

Analysts call soybeans to open 2 to 4 cents per bushel higher.

 

In overnight electronic trade, November soybeans were 3 3/4 cents higher at US$5.92 a bushel, December soymeal was unchanged at US$177.60 and December soyoil was 11 points higher at 24.00 cents per pound.

 

With the harvest wrapping up and speculative funds in a buying mode the market is poised to extend gains on seasonal buying that occurs once harvest related activities wind down, said Jason Roose, analyst with U.S. Commodities in West Des Moines Iowa.

 

Solid weekly export sales with China the key buyer are seen adding mild support to prices, as the market begins to focus on demand and South American crop prospects with supply concerns diminishing in the U.S., traders said.

 

However, some analysts caution that weak cash market prices with storage and transportation concerns should limit upside potential and curtail bullish enthusiasm until fresh supportive fundamental news emerges.

 

Nevertheless, technical buying will be a key, with the allure of the US$6.00 level in November soybeans seen as a near term target. However, the 50-day moving average at US$5.98 1/2 is the first hurdle that traders will be watching, said a CBOT commission house broker.

 

Technical analyst Jim Wyckoff said this week's price action is a solid clue that a harvest low is in place, but market bears still have the overall technical advantage.

 

First resistance for November soybeans is seen at US$5.95 1/2-Thursday's high-and then at US$6.00. First support is seen at US$5.80 and then at US$5.76 1/2-the top of this week's big upside price gap on the daily bar chart.

 

Meanwhile, the U.S. Department of Agriculture said Thursday that 2005-06 marketing year sales totaled 684,900 tonnes, with the primary buyer China at 517,800 tonnes. Pre-report estimates ranged from 400,000 to 550,000 tonnes.

 

Net old/new crop soymeal sales were 192,900 tonnes, a figure well above estimates that ranged from 70,000 to 120,000 tonnes. Net sales of 7,500 tonnes were reported for soyoil. Trade guesses called for commitments in a range of 2,000 to 10,000 tonnes.

 

The USDA's CCC bought 7,000 metric tonnes of U.S. soybeans for Madagascar.

 

A total of 240 delivery notices were posted against the October soymeal contract, with customer accounts at RIS Division of Refco issuing 225 lots and a customer account at Prudential Financial stopping the 240 lots. The last date assigned was Sept. 29. Seventy-six delivery notices were posted against October soyoil. Customer accounts at Prudential Financial issued the 76 lots and the house account at ADM Investor Services stopped the 76 lots. The last date assigned was Sept. 26. In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended little changed Friday after yet another choppy session, with talk of strong exports countered by supply concerns. The benchmark December CPO contract ended flat at MYR1,453 a metric tonne, after moving between MYR1,441/tonne and MYR1,462/tonne.

 

Rotterdam soybeans were mixed and soymeal prices were mostly higher, European vegoils were flat to lower.