November 9, 2006

 

CBOT Soy Outlook on Thursday: Up 2-3 cents; corn strength, technical support

 

 

Soybean futures on the Chicago Board of Trade are seen starting Thursday's day session higher, taking its lead from corn and technical factors following a neutral crop report from the U.S. Department of Agriculture, analysts said.

 

Soybean futures are called to open 2 to 3 cents higher.

 

The report from the USDA was neutral for soybeans and should keep traders watching technicals and fund activity for leadership, said Mike Zuzolo, senior analyst with Risk Management Commodities Inc. in Lafayette, Ind.

 

The lower than expected increase in U.S. ending stocks will provide mild support to keep traders comfortable with prices at current levels and strengthen market perceptions that soybeans need to move in tandem with corn to fight for 2007 acres, analysts added.

 

The USDA pegged 2006-07 soybean production at 3.204 billion bushels, below the average of trade estimate of 3.240 million, but up 15 million from October. Soybean yield is projected at 43.0 bushels per acre, up from the October projection of 42.8 bushels an acre but below the average of trade estimates at 43.5. 2006-07 U.S. ending stocks are estimated at 565 million bushels, below the average of trade estimates at 583 million.

 

The USDA's U.S. production number if realized will be the largest on record, with the yield estimate matching last year's record level. The crush was raised 5 million bushels due to improved soymeal export prospects, USDA said in the report.

 

A technical analyst said market bulls have a solid technical advantage following Wednesday's price action. The next upside price objective for January soybeans is closing prices above solid psychological resistance at US$7.00 a bushel. The next downside price objective is closing prices below solid support at US$6.55.

 

First resistance for January soybeans is seen at the contract high of US$6.82 1/2 and then at US$6.85. First support is seen at Wednesday's low of US$6.73 1/2 and then at US$6.70.

 

Meanwhile, USDA said net weekly export sales for soybeans were 768,300 tonnes, 5% lower than the prior the 4-week average. Trade estimates called for commitments in the 500,000 to 700,000 tonne range. The biggest buyers were China, buying 230,400 tonnes, and the Netherlands with 111,700 tonnes. Soymeal sales were 266,100 tonnes, compared to estimates of 50,000 to 125,000 tonnes. Soyoil 2006-07 sales were a net reduction of 100 tonnes, while the trade guess was zero to 10,000 tonnes.

 

Taiwan Sugar Corp. bought 12,000 tonnes of U.S.-origin soybeans from trading house Marubeni in a tender concluded Thursday, a trader in Taipei said.

 

Brazil's 2006-07 soy crop should produce 55.2 million metric tonnes of soybeans from planted area estimated between 20.7 million and 21.1 million hectares, the National Commodities Supply Corp, or Conab, said Thursday.

 

In deliveries, a total of 1,351 delivery notices recirculated against the November soybean future. Issuers and stoppers were widely scattered among various commission houses. The last trade date assigned was Nov. 8.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly higher Thursday following gains in soybean futures at CBOT. The most active May 2007 contract settled RMB8 higher at RMB2,842 a metric tonne, after trading between RMB2,832/tonne and RMB2,852/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives finished slightly higher Thursday on a minor technical rebound and hopes that export and supply volumes will be more bullish, analysts said. The benchmark January contract settled up MYR13 at MYR1,687 a metric tonne.