May 16, 2006
CBOT Soy Outlook on Tuesday: Seen down 3-5 cents; following overnight theme
Soybean futures on the Chicago Board of Trade are seen starting Tuesday's open auction session on the defensive, extending the overnight theme, with improved planting prospects applying light pressure.
Soybeans are called to open 3 to 5 cents lower.
In overnight electronic trade, July soybeans were 4 cents lower at US$6.00 1/2, July soymeal was US$0.40 lower at US$177.00 and July soyoil was 24 points lower at 25.25 cents per pound.
The absence of a decisive move in outside inflationary markets, and the ability of futures to break underlying support levels overnight will provide a modest spark to promote a lower start to the day, analysts said.
Planting progress trailing behind the five-year average isn't considered a major concern at this point, with warmer, drier weather outlooks heading toward the weekend and next week expected to promote active seedings, particularly with plantings reported over 50% complete in many areas of Iowa, said Dax Wedemeyer, analyst with U.S. Commodities in West Des Moines, Iowa.
The U.S. Department of Agriculture reported 33% of the U.S. soybean crop planted as of Sunday. The pace of seedings lags behind last year's 43% as well as behind the five-year average of 35%. The top U.S. producing states of Illinois and Iowa plantings were reported at 31% and 41% complete, compared to their respective five-year averages of 43% and 35%. 9% of the U.S. soybean crop was reported emerged compared to last year and the five-year average of 10%.
The DTN Meteorlogix Weather Service forecast said mainly dry conditions are on tap for the western Midwest Tuesday and Wednesday. Dry conditions or only a few light showers may emerge in the region Thursday. Temperatures will average below normal again Tuesday, near to below normal Wednesday and Thursday.
In the eastern Midwest, there is a chance for sprinkles and light showers over the next three days. Temperatures will average below normal Tuesday, near to below normal Wednesday, and below normal again Thursday, Meteorlogix said.
However, other variables aside from fundamentals have traders continuing to look over their shoulders for speculative buying to emerge, with inflation concerns and optimistic outlooks for biodiesel keeping a level of strength in the market, said John Kleist of Kleist Agricultural Consulting.
Market technicians say July futures still have the slight technical advantage, at present, and it will take a close below support at US$5.91 to provide fresh downside technical momentum.
First resistance for July soybeans is seen at US$6.08-the top of Monday's downside price gap - and then at US$6.15. First support is seen at US$6.01 - Monday's low - and then at US$5.96 1/2.
U.S. Midwest cash soybean basis bids are mostly unchanged to lower Tuesday, cash dealers said. Spot cash soybean bids were down 16 cents in Champaign, Ill., and down 2 cents in St Louis, Mo., according to cash sources Tuesday.
Rotterdam soybeans and soymeal prices were mostly lower, and European vegoils were mixed.
In news, Brazil's largest rail transportation company, America Latina Logistica, will temporarily cease operations Tuesday because of protesting farmers that have blocked all major rail lines to the Paranagua port in Parana state, the local Estado newswire reported.
In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Tuesday, on overnight losses in Chicago Board of Trade soybean futures and a fall in other commodities. The benchmark September 2006 soybean contract settled RMB38 lower at RMB2,649 a metric tonne, after trading between RMB2,623/tonne and RMB2,665/tonne.
Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Tuesday, dragged down by losses in soyoil futures and renewed strength in the Malaysian ringgit. The benchmark August CPO contract ended at MYR1,465 a metric tonne, down MYR20 from Monday after moving between MYR1,463 and MYR1,471/tonne.
