May 22, 2007

 

CBOT Soy Outlook on Tuesday: 2-3 cents lower on bearish crop progress reports

 

 

Chicago Board of Trade soybean futures are expected to start trading 2-to-3 cents lower Tuesday after better-than-expected planting progress and weakness in overnight E-CBOT trading, analysts said.

 

In overnight e-CBOT trading, July soybeans fell 3 cents to US$7.97 1/2 per bushel, August declined 3 3/4 cents to US$8.03 1/2 and November fell 3 1/4 cents to US$8.26. E-CBOT volume in July was 2,662 contracts.

 

Soybeans should come under pressure from the better-than-expected crop progress report, an analyst said.

 

The U.S. Department of Agriculture reported that 59% of the U.S. soybean crop had been planted through May 20, above the 50%-55% expected by analysts and above the five-year average of 48%.

 

Twenty-one percent of the crop was reported emerged, compared to 16% in 2006 and the five-year average of 18%.

 

In Illinois 75% of the crop has been seeded, well above the five-year average of 47%. In Iowa, 61% of the crop has been planted, in line with the five-year average.

 

The planting progress was better than anticipated and the market was weaker on the news overnight and on profit taking, a floor analyst said. Soybeans should open to the downside, but will be influenced by the midday weather updates, he added.

 

In the western U.S. Midwest showers and thundershowers are forecast Wednesday and Thursday with rainfall potential of 0.30-1.50 inches and locally heavier, DTN Meteorologix Weather said. Temperatures are expected to turn cooler in the period after averaging above normal Tuesday.

 

In the eastern U.S. Midwest, mainly dry weather is expected Wednesday and Thursday with the exception of Illinois and Wisconsin, which could see showers with amounts of 0.10-0.50 inch on Thursday, Meteorologix Weather said, Temperatures are expected to average above normal with highs mostly in the 80's degrees Fahrenheit.

 

In the 6-to-10 day outlook, temperatures are expected to average near-to-below normal north and near-to-above normal south. Rainfall is expected to average near-to-above normal west and near-to-below normal east, Meteorologix Weather said.

 

On day session open auction technical charts, July soybeans closed nearer the session high and hit a fresh 11-week high, a technical analyst said. The bulls continue to have solid upside technical momentum on their side as prices pushed above major psychological resistance at US$8.00.

 

The next upside price objective for the bulls is closing prices above solid technical resistance at the contract high of US$8.22. The next downside objective for the bears is closing prices below solid support at US$7.80, the analyst said.

 

First resistance is seen at Monday's high of US$8.03 and then at US$8.08. First support is seen at Monday's low of US$7.94 1/2 and then at US$7.89.

 

In overseas markets, palm oil futures settled higher with the benchmark August contract up MYR13 at MYR2,375 per metric tonne.

 

Soybean futures on China's Dalian Commodities Exchange settled higher on spillover from higher prices at the CBOT Monday, analysts said. The benchmark September contract ended up RMB28 at RMB3,251 per metric tonne.