December 29, 2006

 

CBOT Soy Outlook on Friday: Flat to up 2 cents; e-CBOT theme, strong sales

 

 

Soybean futures on the Chicago Board of Trade are poised to start the last trading day of 2006 steady to firmer Friday, garnering support from the overnight price theme and solid weekly export sales.

 

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

 

In e-CBOT trade, January soybeans were 1/4 cent higher at US$6.76 and March was 1 cent higher at US$6.91 1/2 per bushel.

 

The absence of fresh fundamental news will keep futures feeding off technical strength, with solid underlying demand and a firm speculative long position in the market, keeping sellers on the run, analysts said.

 

Outlooks for reduced U.S. soy acres in 2007 and strong global demand for vegetable oils is seen a positive influence for prices, while light end-of-the-year positioning and favorable South American crop conditions keep a lid on upside movement, a CBOT analyst said.

 

A market technician said the technical outlook for soybeans remain positive in the wake of Tuesday's huge gap open higher, which also saw a break of a declining daily trendline and the subsequent bullish settlements above the 40-day moving average. A solid push above old gap resistance at US$6.75 3/4 basis January is needed to continue the rally near term. Beyond that ceiling lies major resistance at the contract high of US$6.93. On the downside, gap top support lies at US$6.65 and gap bottom support is seen at US$6.60.

 

The U.S. Department of Agriculture said net weekly export sales for soybeans were 1,037,400 metric tonnes. Trade estimates called for commitments in the 500,000 to 750,000 tonne range. The biggest buyers were China, buying 458,800 tonnes, and unknown destinations, buying 197,500 tonnes.

 

Soymeal sales were 108,900 tonnes. Analysts' estimates called for commitments in a range of 75,000 to 150,000 tonnes. Soyoil 2006-07 sales were 61,000 tonnes, a market year high. The trade guess was 25,000 to 50,000 tonnes. The primary buyers were unknown destinations with 34,500 tonnes and China with 18,000 tonnes.

 

In deliveries, a total of 683 delivery notices were posted against January soybeans. The last trade date assigned was Dec. 13. 1,523 delivery notices were posted against the December soyoil futures. A customer account at RJ O'Brien issued 672 lots while the house account at Bunge Chicago stopped 981 lots. The last trade date assigned was Dec. 27. Soymeal delivery notices totaled 1,107 lots, with the house account at ADM Investor Services the principle issuer of 405 lots. Stoppers were widely scattered. The last trade date assigned was Dec. 8.

 

CBOT grain and oilseed markets close at 12:00 p.m. CST Friday and will be closed Monday in observance of the New Year's Day holiday. The CBOT is expected to make an announcement Friday regarding its plans for Tuesday's national day of mourning for the late former U.S. President Gerald Ford. In the past, the CBOT has closed for similar occasions, but this would create an unusual four-day break in trading due to the New Year's Day holiday on Monday.

 

The DTN Meteorlogix weather forecast said hot, dry weather will deplete soil moisture in Argentina's crop belt during the next 3-4 days. However, soil moisture is currently adequate to surplus. Showers arrive next week along with more seasonal temperatures.

 

In Brazil, southern soybean areas have benefited from recent rain activity and less hot weather. There is expected to be a period of hotter and drier weather during this period but this shouldn't last long enough to cause any significant concern, Meteorlogix forecasts.

 

Rotterdam soybeans were higher and soymeal were mixed. European vegetable oils were mixed.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended lower Friday as the market succumbed to profit-taking pressure a day after reaching a near eight-year high. The March contract ended down MYR37 at MYR1,995/tonne.