April 18, 2006

 

CBOT Soy Outlook on Tuesday: Steady-down; e-CBOT, consolidation

 

 

Soybean futures on the Chicago Board of Trade are seen starting Tuesday's session steady to lower, in tune with overnight trade, as the market consolidates Monday's rally to two-week highs.

 

Analysts expect soybeans to open flat to 2 cents per bushel lower.

 

In overnight electronic trade, May soybeans were 1/2 cent lower at US$5.71, July soybeans were 3/4 cent lower at US$5.84 3/4, July soymeal was US$0.10 lower at US$178.30 and July soyoil was 4 points higher at 23.17 cents per pound.

 

Trade consolidation looks to be the initial feature of the market, with futures stabilizing from Monday's rally amid the lack of fresh supportive fundamental influences to inspired aggressive buying interest, said a CBOT commission house broker.

 

Concerns that a slower-than-expected corn planting pace could lead to more soybean acres are expected to generate light pressure, as the market continues to adjust to discourage increased soy plantings amid the market's bearish supply side fundamentals.

 

However, the influence of higher outside markets, with silver and gold continuing their march higher and firmer crude oil futures are seen lending support to limit any downside moves, analysts say.

 

Traders add that the ability of nearby futures to settle above their respective 20-day moving averages Monday was technically supportive and may signal that a near term low maybe in place.

 

Market technicians say Monday's price action provided fresh upside technical momentum, but it will take a close above chart resistance at Monday's high of US$5.89 1/2 to generate some better upside technical momentum. A close below the November low of US$5.65 would provide more solid downside technical momentum to suggest another leg down in prices.

 

First resistance for July soybeans is seen at US$5.89 1/2--Monday's high--and then at US$5.95. First support is seen at US$5.81 1/2--Monday's low--and then at US$5.78 3/4.

 

U.S. Midwest cash soybean basis bids are unchanged to higher Tuesday, cash dealers said. Spot cash soybean bids were up 2 cents in central Ill., up 5 cents in Des Moines, Iowa, and up 6 cents in St. Louis, Mo., according to cash sources Tuesday.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said Brazil soybean growing areas will experience improved conditions for harvesting due to less rainfall during a 5 day period. In Argentina, showers and possible thundershowers during the next few days may cause harvest delays, Meteorlogix added.

 

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

 

In overseas markets, soybean futures on China's Dalian Commodity Exchange settled mostly lower, pressured by losses of other local futures in the session, as the local market had already gained Monday in anticipation of a higher opening of Chicago Board of Trade after the holiday, analysts said. The benchmark September 2006 soybean contract settled RMB4 lower at RMB2,600 a metric tonne, after trading between RMB2,591/tonne and RMB2,615/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended marginally lower Tuesday, as late profit-taking eroded earlier crude oil-inspired gains. The benchmark July CPO contract ended at MYR1,468 a metric tonne, down MYR2 from Monday after moving between MYR1,464 to MYR1,478/tonne.