April 11, 2006

 

CBOT Soy Outlook on Tuesday: Up 2-4 cents; e-CBOT, looking for stability

 

 

Chicago Board of Trade soybean futures are seen starting Tuesday's session with moderate gains, following the overnight theme, as the market attempts to find stability after the nearby future stumbled to a 14-month low Monday.

 

Analysts expect soybeans to open 2 to 4 cents per bushel higher.

 

In overnight electronic trade, May soybeans were 2 3/4 cents higher at $5.58, July soybeans were 3 1/2 cents higher at $5.72 1/2, May soymeal was $0.30 higher a short tonne at $168.70 and May soyoil was 19 points higher at 22.82 cents per pound.

 

The market will attempt to consolidate once again amid oversold market conditions, with the potential for inflationary speculative buying following overnight gains in metals and crude oil futures markets, analysts said.

 

The relative strength index for May futures ended at 29.44 Monday. A RSI reading below 30.00 is considered oversold.

 

However, traders are said to be cautious of pushing upside movement, as the absence of fresh supportive news and with a lower market theme in place, futures remain vulnerable to selling pressure on any sign of buying exhaustion, said a CBOT commission house broker.

 

Technical analysts said the market presently has solid near-term technical momentum, and it will take a close above chart resistance at $5.85 basis the July future to provide some fresh upside technical momentum.

 

First resistance for July soybeans is seen at $5.75 1/2 - Monday's high - and then at $5.81 1/2. First support is seen at $5.68 1/4 - Monday's low - and then at $5.65 - the November low.

 

U.S. Midwest cash soybean basis bids are unchanged to higher Tuesday, cash dealers said. Spot cash soybean bids were up 2 cents in St. Louis, Mo., up 2 cents in Central, Ill., and up 4 1/2 cents in Peoria, Ill., according to cash sources Tuesday.

 

DTN Meteorlogix Weather Service forecast said Brazil's Rio Grande Do Sul and Parana states will experience dry conditions through Thursday. Scattered showers and thunderstorms will develop from the south to the north on Friday and Saturday. Rainfall totals of 0.30-1.50 inches with locally heavier expected. The heaviest activity will favor Rio Grande do Sul.

 

In Mato Grosso and Mato Grosso Do Sul dry conditions or just a few light showers are forecast through Friday. Scattered showers and thunderstorms will develop over the weekend, with rainfall totals of 0.25-0.75 inch expected, Meteorlogix said.

 

Rotterdam soybeans and soymeal prices were mostly lower, and European vegoils were mixed.

 

In overseas markets, soybean futures on China's Dalian Commodity Exchange settled slightly lower Tuesday, with nearby commodities lending some support, analysts said. The benchmark September 2006 soybean contract settled RMB6 lower at RMB2,581 a metric tonne, after trading between RMB2,566/tonne and RMB2,598/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply higher Monday after the Malaysian Palm Oil Board issued a surprisingly bullish supply and demand report. The benchmark June CPO contract ended at MYR1,446 a metric tonne, up MYR24 from Friday.