July 27, 2006

CBOT Soy Outlook on Thursday: Down 1-3 cents; e-CBOT; midwest moisture

Soybean futures on the Chicago Board of Trade are seen starting Thursday's open auction session modestly lower, in step with the overnight theme, as trader weigh the benefits of rain showers moving through the Midwest.

Soybeans are called to open 1 to 3 cents lower.

In e-CBOT trade, November soybeans were 3 1/2-cents lower at US$5.99 1/4 per bushel.

Scattered rain showers accompanying hot temperatures in the Midwest have traders debating the impact expected weekend heat will have on the market, analysts said.

The market has settled into a range, with the same weather pattern of beneficial moisture ahead of heat that we have seen all year providing few surprises, said Don Roose, president U.S. Commodities in West Des Moines Iowa.

"The market is set to start lower, but I would not be surprised to see prices trade on both sides of unchanged during the session, as the market remains respectful of falling crop ratings and the uncertainty of crop size ahead of the August crop report," Roose added.

Meanwhile, technical features may emerge as a featured attraction, as traders will watch support at the US$6.00 per bushel level basis November for signs of strength or weakness in the market.

Technical analysts said recent price action in November futures has formed a bullish island bottom reversal pattern on the daily bar chart, suggesting a near-term low is in place. Their next downside price objective is closing prices below solid support at last week's low of US$5.95 1/2, while it will take a close above solid technical resistance at this week's high of US$6.14 1/2 to provide some fresh upside technical momentum.

First resistance for November soybeans is seen at US$6.08 1/2 -Wednesday's high - and then at US$6.14 1/2. First support is seen at US$6.01 1/2 - Wednesday's low -and then at US$6.00.

The DTN Meteorlogix Weather Service forecast said another surge of fairly hot weather appears likely for the western Midwest during a 5 day period. Dryness is now the most important issue for filling crops, especially over the northwest part of this region. The next chance for scattered thunderstorms comes late Monday into Tuesday, Meteorlogix reports.

In the eastern Midwest, scattered thunderstorms will help improve the condition of corn and soybeans during the next day or two. Hot, dry weather during the weekend and Monday should give way to more thundershowers Tuesday and Wednesday, Meteorlogix forecasts.

The U.S. Department of Agriculture said weekly export sales for soybeans were 248,300 metric tonnes, versus trade estimates of 150,000 to 400,000 tonnes. 2005-06 sales totaled 198,700 tonnes, this was 16% below the week earlier and 30% under the prior 4-week average. The biggest buyers were Thailand and Mexico. 2006-07 sales totaled 49,600 metric tonnes. Soymeal old and new crop sales were 166,400 tonnes, compared to estimates of 50,000 to 150,000 tonnes. Soyoil sales were 500 tonnes, while the trade guess was zero to 6,000 tonnes.

The U.S. Census Bureau said the June soybean crush was 137.4 million bushels, on par with expectations of 137.9 million bushels. Meanwhile soyoil stocks were 2.906 billion pounds, slightly lower than the average guess of 2.914 billion. Soymeal stocks were 231,011 short tonnes, down from last month's 263,632 tonnes.

U.S. Midwest cash soybean basis bids are mostly unchanged Thursday, cash dealers said. Spot cash soybean bids were down 5-cents in Champaign, Ill., and down 2-cents in St. Louis, MO., according to cash sources Thursday.

Rotterdam soybeans were mostly lower and soymeal prices were flat to lower. European vegoils were flat to lower.

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Thursday on oversupply and CBOT losses, analysts said. The benchmark September contract settled RMB21 lower at RMB2,407 a metric tonne, after trading between RMB2,385/tonne and RMB2,417/tonne.

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly higher after a choppy trading day Thursday, bolstered by talk of weaker July production. The benchmark October contract ended at MYR1,574 a metric tonne, up MYR9 from Wednesday.