October 26, 2006

 

CBOT Soy Outlook on Thursday: Down 2-4 cents; carryover from Wednesday's setback

 

 

Traders at the Chicago Board of Trade anticipate a lower start for soybean futures, as carryover selling from Wednesday's weak technical close is seen weighing on prices.

 

Soybean futures are called to open 2 to 4 cents lower.

 

In e-CBOT trade, November soybeans were 3 3/4 cents lower at US$6.18 1/4 and January was 4 cents lower at US$6.31 1/2 per bushel.

 

Overnight price action is pointing to a lower opening, with Wednesday's poor close and improved cash movement satisfying near term demand expected to pressure futures, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The market's upside momentum faltered at Wednesday's highs, leading traders to view the advances as an intermediate top for prices, Roose added.

 

Meanwhile, supportive news is limited, with export sales on the low side of estimates and crush data below the average guess, failing to provide any fundamental strength, traders said. However, speculative interest remains a key determinant of price direction, with traders leery of aggressively pressing prices, a CBOT commission house said.

 

A technical analyst said Wednesday's price action may have formed a buying exhaustion tail on the daily bar chart, whereby buying interest dries up at higher price levels and prices back way off the high as buyers became exhausted at higher levels. This is an early technical clue of a market top being in place. At the very least, Wednesday's contract high of US$6.55 basis January is strong overhead resistance to overcome.

 

First resistance for January soybeans is seen at US$6.38 3/4 and then at US$6.45. First support is seen at US$6.30 and then at US$6.27.

 

U.S. Department of Agriculture said net weekly export sales for 2006-07 soybeans were 627,000 metric tonnes, 28% lower than the previous week. Trade estimates called for commitments in the 600,000 to 800,000 tonne range. The biggest buyers were China, buying 297,800 tonnes, and Germany with 118,100 tonnes. Soymeal sales were 101,300 tonnes, compared to estimates of 25,000 to 175,000 tonnes. Soyoil sales were 2,100 tonnes, while the trade guess was zero to 35,000 tonnes.

 

The Census bureau put the September crush at 142.3 million bushels, slightly below where a survey of analysts estimated it at 143.8 million bushels. Soyoil stocks were put at 2.968 billion pounds compared to estimates of 3.018 billion pounds. Soymeal stocks were 320,032 short tonnes, well above the analyst estimate of 257,200.

 

The DTN Meteorlogix weather forecast says rainfall and cooler temperatures will further delay the crop harvests over the southern and eastern portion of the belt during the next few days.

 

In news, trade sources said South Korea passed on a tender to purchase 50,000 metric tonnes of U.S. soybeans.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Thursday, pressured by Wednesday's CBOT losses, analysts said. The January 2007 contract fell RMB8 to settle at RMB2,572 a metric tonne, after trading between RMB2,562 and RMB2,576/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply higher Thursday as the market played catch-up with gains in other commodities during the recent long holidays. The January contract ended at MYR1,650 a metric tonne, up MYR27.