November 2, 2006

 

CBOT Soy Outlook on Thursday: Up 7-8 cents following overnight strength

 

 

Soybean futures on the Chicago Board of Trade are seen starting Thursday's day session on firm footing, taking their lead from overnight price strength, as bullish technical momentum keeps the market on the run.

 

Soybean futures are called to open 7 to 8 cents higher.

 

In e-CBOT trade, November soybeans were 8 cents higher at US$6.53 and January was 7 1/2 cents higher at US$6.65 3/4 per bushel.

 

Bullish momentum is the driving force in the market, as speculative buyers continue to underpin prices with firm cash basis levels and a lack of fresh fundamental developments keeping sellers sidelined, analysts said.

 

Soybeans roared to new contract highs overnight leaving futures overbought, but without a significant selling presence in the market, upward movement remains the path of least resistance, traders added.

 

Spillover strength from expected higher opening in neighboring grain futures is seen aiding the supportive tone amid perceptions soybeans remain underpriced to corn and wheat, traders added.

 

A technical analyst said Wednesday's price action scored a fresh contract high and produced a bullish outside day up on the daily bar chart, leaving market bulls with a solid technical advantage. The next upside price objective is to close January futures above solid chart resistance at US$6.75. The next downside price objective is closing prices below solid support at US$6.25.

 

First resistance for January soybeans is seen at Wednesday's contract high of US$6.59 1/2 and then at US$6.65. First support is seen at US$6.55 and then at US$6.49.

 

U.S. Department of Agriculture said net weekly export sales for soybeans were 640,200 metric tonnes, 3% higher than the previous week, but 32% below the 4-week average. Trade estimates called for commitments in the 550,000 to 800,000 tonne range. The biggest buyers were China, buying 335,900 tonnes, and Mexico with 156,100 tonnes. Soymeal old and new crop sales were 58,300 tonnes, compared to estimates of 75,000 to 150,000 tonnes. Soyoil sales were 5,800 tonnes, while the trade guess was zero to 10,000 tonnes.

 

Informa Economics estimated 2006-07 U.S. soybean production at 3.246 billion bushels with a yield of 43.6 bushels per acre. In October, USDA estimated U.S. soybean production at 3.189 billion bushels using a yield of 42.8 bushels per acre. On Nov. 9, USDA is scheduled to release its next U.S. soybean production estimates at 7:30 a.m. CST (1330 GMT).

 

The U.S. Census Bureau revised its September soyoil stocks figure, marginally raising the September stocks figure to 2,967,996,000 pounds from the 2,967,550,000 reported Oct. 26. The figure is down from August's stocks of 3.061 billion pounds but well above the 1.699 billion pounds reported at the same time last year.

 

In deliveries, a total of 617 delivery notices were posted against the November soybean future. The house account at ADM Investor Services principle issuer of 400 lots as well as the primary stopper of 546 lots. The last trade date assigned was Oct. 27.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Thursday, supported by Wednesday's CBOT gains, analysts said. The most active May 2007 contract rose RMB57 to settle at RMB2,841 a metric tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply higher Thursday as bullish sentiment about the commodity's long-term outlook lifted the market to a near 30-month high. The benchmark January CPO contract ended at MYR1,724 a metric tonne, up MYR44 from Wednesday.