April 24, 2007

 

CBOT Soy Outlook on Tuesday: Down 7-9 cents; e-CBOT theme, soy acres talk

 

 

Chicago Board of Trade soybean futures are expected to start Tuesday's day session on weak footing, in tune with the overnight theme, as bearish momentum and talk of the potential for additional soy acres weighs on prices.

 

In e-CBOT trade, May was 9 cents lower at US$7.12 1/4, July was 10 cents lower at US$7.28, and November soybeans were 9 1/4 cents lower at US$7.56 1/2.

 

CBOT soybean futures are called to start the session 7 to 9 cents lower.

 

A slower-than-expected corn planting pace reported in Monday's crop progress report is rekindling thoughts of increased soybean acres and when you add in bearish technical momentum, downside pressure seems evident, analysts said.

 

Large U.S. and global inventories coupled with slowing export demand are not providing any incentives to attract aggressive buying to the market either, traders said.

 

However, despite futures being in a downtrend, the market has reached oversold conditions leaving some analysts pointing to a near term bottom forming in the market, a CBOT floor trader said.

 

A technical analyst said a minor bear flag may be forming on the daily bar chart, with a two-month-old downtrend line in place on the daily bar chart for July futures. However, his bias is that there is not much left on the downside in soybeans, as there is some strong underlying technical support just below the market. Soybean bulls would regain some upside technical momentum by producing a close above solid chart resistance at US$7.56, he said. The next downside price objective is closing prices below solid support at last week's low of US$7.29.

 

First resistance for July soybeans is seen at Monday's high of US$7.42 and then at US$7.50. First support is seen at Monday's low of US$7.32 1/2 and then at last week's low of US$7.29.

 

The DTN Meteorlogix Weather Service forecast said wet or very wet conditions will keep planting progress in the western Midwest very slow this week. In the eastern Midwest, heavy rains are expected to return to the region late Tuesday and during Wednesday. This will halt any field work or planting that has been going on under the dry and warm weather of recent days.

 

The Meteorlogix 6-10 day forecast for the Midwest calls for temperatures to average above normal, with precipitation near to below normal.

 

In demand news, Taiwan Sugar Corp. bought 12,000 metric tonnes of U.S. soybeans from trading house Agrex at a tender concluded Tuesday, a trader in Taipei said.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange in China settled mostly lower tracking similar losses in CBOT soybean contracts. The benchmark September soybean contract settled RMB8 lower at RMB3,073/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly higher after choppy trade Tuesday, with lingering concerns about tight supply lending support to the market. The benchmark July contract ended up MYR13 at MYR2,182 a metric tonne.