July 7, 2006

 

CBOT Soy Outlook on Friday: Down on wetter US midwest forecast

 

 

A rainier near-term weather forecast for the U.S. corn belt is expected to pressure Chicago Board of Trade soy complex futures Friday.

 

Early calls for most-active November soybeans are down 10-12 cents a bushel.

 

In e-cbot trade, November soybeans slid 12 1/4 cents at US$6.23 per bushel.

 

In addition to the losses overnight, soybeans saw sizable gains Thursday, so the calls for a lower open might be exacerbated by profit taking after Thursday's rally, floor sources said.

 

DTN Meteorologix said Friday's in the western corn belt there is no significant temperature stress for crops during the next five to six days, with some rain is possible early next week. However, this isn't expected to significantly improve soil moisture. The eastern corn belt isn't expected to see abusively hot weather for at least another five to seven days. They say rainfall chances increase early next week but amounts and coverage are highly uncertain at this time. The Delta remains dry and hot.

 

"We're in a weather market and the weather pendulum just swung back overnight," said John Kleist of John W Kleist Ag Consulting. "The beans don't have a lot going for it except the prospect of adverse weather. The trade there is volatile, it's violent."

 

Little bullish help is expected from weekly export sale data. The U.S. Department of Agriculture said weekly export sales for soybeans were 214,500 metric tonnes, versus trade estimates of 200,000 to 400,000 tonnes. This was 42% below the week earlier and 24% under the prior 4-week average. The biggest buyers were China, Japan and the Netherlands.

 

Soymeal sales were 90,800 tonnes, compared to estimates of 65,000 to 125,000 tonnes. Net sales of MT were 17% below the previous week and 19% under the prior 4-week average. Major buyers include Mexico, Canada and Japan. Soyoil sales were 3,300 tonnes, while the trade guess was zero to 6,000 tonnes.

 

"The export sales also sagged back a little bit. China was a modest buyer," Kleist said.

 

Private analytical firm Informa said U.S. soybean production is estimated at 3.116 billion bushels, which Kleist said is probably in line with the new acreage figure released by USDA a week ago.

 

"It's not a surprise; we have more acres. It's still going to depend on the rest of the summer to see if those acre produce," he said.

 

Floor source said the market will also be at the mercy of the funds, which were buyers in Thursday's rally.

 

Deliveries posted against the July soyoil contract were 75 contracts Friday. The customer account of RJ O'Brien issued 69 contracts and stopped 29 contracts, with the house account of ADM Investor Services Inc. stopping 23 contracts.

 

Deliveries posted against the July soybean contract Friday were 968 contracts. The customer account of Dowd Wescott Group issued 210 contracts and stopped 337 contracts, while the customer account of Man Financial issued 226 contracts and stopped 322 contracts.

 

Rotterdam soybean and soymeal prices were firmer. European vegoils also gained.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher at its highest level in over four months as the market tracked a rally in CBOT soyoil futures. September ended at MYR1,512 a metric tonne, up MYR14.