April 3, 2007

 

CBOT Soy Outlook on Tuesday: Flat, lower; consolidates Monday's rally

 

 

Chicago Board of Trade soybean futures are seen starting Tuesday's day session steady to lower, easing back from Monday's strong gains.

 

In e-CBOT trade, May was 1/4-cent lower at US$7.78 3/4 and November soybeans were 1/4-cent lower at US$8.21.

 

CBOT soybean futures are called to start the session flat to 1 cent per bushel lower.

 

A quiet news front is seen keeping technical features in play, with the market stabilizing after Monday's impressive gains, analysts said.

 

Early price weakness in crude oil futures, and concerns soybean's recent price appreciation to corn may be buying some additional soy acreage are seen taking the edge off prices, analysts added. Wet Midwest weather is also raising fears that delays to corn plantings could shift some acres to soybeans as well, traders said.

 

Nevertheless, bullish longer range fundamental outlooks coupled with underlying technical support are seen as underpinning features to keep a floor beneath the market, a CBOT floor analyst said. Talk of crop losses following recent floods in Argentine crop areas is seen providing mild support also, he added.

 

A technical analyst said market bulls regained solid upside technical momentum Monday, but any more selling pressure in corn is still likely to limit the upside in soybeans. The market would regain better technical momentum by producing a close above solid chart resistance at US$7.93 1/2 basis May futures, which would fill a downside price gap on the daily bar chart. The next downside price objective is closing prices below solid support at US$7.60.

 

First resistance for May soybeans is seen at Monday's high of US$7.87 and then at US$7.93 1/2. First support is seen at US$7.75 and then at US$7.70.

 

The DTN Meteorlogix Weather Service forecast said rain or showers may end as snow showers through northern areas of the western Midwest early Tuesday. Dry and windy conditions are on tap for Wednesday, with dry conditions expected again Thursday. Temperatures will turn colder Tuesday and continue below normal Wednesday and Thursday. Mainly dry and cold weather is seen for Friday and Saturday, with temperatures averaging well below normal with lows ranging from the teens to the low or middle 20s.

 

In the eastern Midwest, rain or thunderstorms are expected through northern and eastern areas Tuesday, with a chance for showers southwest during this time. Dry conditions with possibly a few snow showers are on tap for northern areas Wednesday. Rainfall through northern and eastern areas should average 0.25-0.75 inch and locally heavier. Temperatures will average above normal Tuesday, below normal Wednesday and Thursday, Meteorlogix forecasts.

 

Meanwhile, very heavy rains last week likely caused severe flooding in some locations in Argentina. Unfavorable for mature crops and crop harvests, and some harvest losses cannot be ruled out, Meteorlogix reported.

 

In other news, Brazil's March soybean exports rose to 2.05 million metric tonnes compared to 774,800 tonnes exported in February, the Foreign Trade Ministry said Monday. March 2007 exports declined in comparison to March 2006 exports of 2.6 million tonnes, however. Daily export averages were 93,400 tonnes, compared to 43,000 tonnes last month.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled sharply higher Tuesday on gains in CBOT soybean futures Monday. The benchmark September 2007 contract rose RMB48, or 1.5%, to settle at RMB3,273 a metric tonne, after trading between RMB3,265/tonne and RMB3,284/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Tuesday, with the benchmark contract at a fresh eight-year high, boosted by strong gains in CBOT soy complex futures. The benchmark June contract ended at MYR2,086 a metric tonne, up MYR25 from Monday after touching a high of MYR2,103/tonne.