February 17, 2006

 

CBOT Soy Outlook on Friday: Beans firm on e-CBOT, southern America weather

 

 

Soybean futures on the Chicago Board of Trade are expected to open 1-2 cents a bushel higher Friday on firmer overnight prices and concerns over dry growing areas of southern Brazil and Argentina ahead of a three-day weekend in the U.S., sources said.

 

On the e-CBOT platform overnight, most-active May soybeans rose 2 1/4 cents to US$6.06 1/2 and March beans were up 2 3/4 cents to US$5.94 1/4. May soymeal was up 30 cents at US$185.80 a short tonne and May soyoil was up 16 points to 23.14 cents a pound.

 

U.S. markets will be closed Monday for Presidents' Day, and normal futures trading will resume Monday evening with the e-CBOT session.

 

"They're watching the South American weather with a three-day weekend coming up here," said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

The short-covering that has been present in the market the past two sessions also is expected to be a supportive factor in the market, he added.

 

Hot and mostly dry conditions are expected during the next five days in Argentina, which will stress the crops. A better chance of thunderstorms exists later next week as a cold front is expected to move through later Wednesday or Thursday, long-range charts show. The rains will be key as the heat wave will rapidly deplete soil moisture, DTN Meteorlogix said.

 

In Brazil, a few significant thunderstorms have eased developing stress to soybeans in parts of Rio Grande do Sul, though some areas missed these rains and will have to wait about a week before another round of showers shows up.

 

Meanwhile, the U.S. Department of Agriculture on Friday said that the potential for a widespread Asian soybean rust outbreak has "largely abated" after the disease failed to pose a significant threat in 2005, the agency said at its annual Agricultural Outlook Forum in Arlington, Va.

 

U.S. 2006-07 soybean production is estimated at 2.965 billion bushels, compared to 3.086 billion last year. Planted acres were down 1.9 million to 74 million acres, the national soybean yield was pegged at 40.7 bushels per acre and harvested acreage was seen at 72.9 million.

 

The USDA estimated the 2006-07 U.S. crush at 1.730 billion bushels and U.S. export sales were projected at 1.075 billion bushels.

 

U.S. ending stocks were pegged at 560 million bushels, up just slightly from final 2005-06 stocks of 555 million.

 

"Ending stocks were probably a little bit less than people thought, but they were using a yield that was fairly conservative, too, a trendline of 40.7 bushels," Roose said.

 

The average U.S. soybean price was projected at US$5.15 a bushel, down from the 2005-06 average of US$5.50 a bushel, the government said.

 

Soybean prices in Rotterdam were mostly higher Friday afternoon.

 

Soybean futures on China's Dalian Commodity Exchange gained on higher CBOT prices. The benchmark September 2006 contract settled RMB35 higher at RMB2,762 a tonne.

 

In export news, Taiwan bought 60,000 metric tonnes of Brazilian soybeans for April 1-15 shipment from the port of Santos, or any port north of Santos.

 

 

SOY PRODUCTS

 

Soy product markets are expected to open steady to firmer on the higher soybean calls and gains made during the overnight session. Slightly weaker crude palm oil in Malaysia may help cap the upside, however.

 

CPO futures on the Bursa Malaysia Derivatives exchange closed slightly lower in heavy trade on technically overbought conditions. Overall sentiment remained positive, however, ahead of an annual price outlook conference next week in Kuala Lumpur in which bullish forecasts are expected. The benchmark May contract settled at MYR1,488 a tonne, down MYR1 from Thursday.

 

World coconut oil prices rose this week, boosted by bullish sentiment in the palm and soyoil markets. Manila-based traders quoted coconut oil for April/May shipment at US$600 a metric tonne, up about US$10 from the previous week.