October 19, 2006

 

CBOT Soy Outlook on Thursday: Up 5-8 cent; e-CBOT, bullish technicals

 

 

Soybean futures on the Chicago Board of Trade are seen starting Thursday's session on firm footing, continuing the overnight theme on bullish technical momentum.

 

Soybean futures are called to open 5 to 8 cents higher.

 

In e-CBOT trade, November soybeans were 8 1/4 cents higher at US$6.12 3/4 and January was 8 1/4 cents higher at US$6.26 1/4 per bushel.

 

The market is set to open higher on technical strength, with speculative led buying keeping futures immune to bearish fundamentals in the short term, said Don Roose of U.S. Commodities in West Des Moines, Iowa.

 

The unwinding of corn/soybean spreads is seen as a supportive feature, with good underlying demand and talk of the market needing to push prices to levels that will attract cash movement helping underpin prices as well, traders said.

 

However, traders will be watching for signs of upside exhaustion, seeing if futures can hold overnight gains amid the absence of fresh supportive news to aide bullish enthusiasm, Roose added.

 

A technical analyst said market bulls have gained solid upside technical momentum recently. The next upside price objective is to close November prices above solid chart resistance at US$6.15. The next downside price objective is closing prices below solid support at US$5.75, he adds.

 

First resistance for November soybeans is seen at Wednesday's high of US$6.05 3/4 and then at US$6.10. First support is seen at US$6.00 and then at Wednesday's low of US$5.95.

 

U.S. Department of Agriculture said net weekly export sales for soybeans were 868,500 tonnes, 20% lower than the previous week, and 11% under the 4-week average. Trade estimates called for commitments in the 700,000 to 1,100,000 tonne range. The biggest buyers were China, buying 388,400 tonnes, and Mexico with 104,100 tonnes. Soymeal 2006-07 marketing year sales were 151,400 tonnes, compared to estimates of 75,000 to 150,000 tonnes. Soyoil 2006-07 sales were 6,200 tonnes, while the trade guess was zero to 25,000 tonnes.

 

The DTN Meteorlogix weather forecast says mainly dry conditions are on tap for the western U.S. Midwest Thursday. There is a chance for a few light showers Friday and Saturday, while temperatures average below normal Thursday, near to below normal Friday and below normal during Saturday.

 

In the eastern Midwest, rain showers are expected through southeast Missouri, southern Illinois, southern and eastern Indiana and most of Ohio Thursday. Mainly dry conditions are in store for Friday, with a chance for scattered showers during Saturday, favoring the south and east areas. Temperatures will average below normal, Meteorlogix reports.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Thursday. Spot cash soybean bids were up 5 cents in Keokuk, Iowa, down 5 cents in Peoria, Ill., and up 13 cents in St. Louis, Mo., according to cash sources Thursday.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly higher, supported by Wednesday's rise in the CBOT prices, analysts said. The benchmark January 2007 contract rose RMB13 to settle at RMB2,591 a metric tonne, after trading between RMB2,577/tonne and RMB2,604/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended mixed Thursday after a sluggish, uneventful day as market participants began winding down trading activities ahead of long holidays next week. The benchmark January CPO contract ended down MYR2 at MYR1,610 a metric tonne.