May 23, 2006

 

CBOT Soy Outlook on Tuesday: Up 2-4 cents on e-CBOT, firm outside markets

 

 

Soybean futures on the Chicago Board of Trade are seen starting Tuesday's open auction session on the firm side, following the overnight theme, with higher outside markets expected to provide underpinning support.

 

Soybeans are called to open 2 to 4 cents higher.

 

In overnight electronic trade, July soybeans were 4 cents higher at US$5.86 1/2, July soymeal was US$0.60 higher at US$172.80 and July soyoil was 16 points higher at 25.08 cents per pound.

 

The market is a bit oversold and overdue for a bounce, with the supportive influence of higher metals, energies and grain futures expected to lend support to the higher opening, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The July soybean contract ended Monday's session with a relative strength index reading of 29.72. A RSI below 30.00 is considered oversold.

 

The market has not participated in the recent rallies in other grains, and traders anticipate turn around Tuesday price action.

 

Meanwhile, the soybean planting pace continues to move at an above average pace, with lagging seedings and emergence in the eastern Midwest not expected to be a concern at this point with weather conditions conducive for crop development seen expected over the next week, Roose added.

 

The U.S. Department of Agriculture reported that 55% of the U.S. soybean crop had been planted compared to 63% last year and the five-year average of 51%. Analysts had expected the percentage of the crop planted between 50%-60%. Seventeen percent of the crop has emerged compared to 25% in 2005 and the five-year average of 23%.

 

Technical analysts say the next downside price objective for the market is technical support at the April low of US$5.68 1/4 basis the July future. The market has fresh downside technical momentum, and it will take a close back above psychological resistance at US$6.00 to provide some fresh upside technical momentum.

 

First resistance for July soybeans is seen at US$5.89--Monday's high--and then at US$5.95. First support is seen at US$5.81--Monday's low--and then at US$5.75.

 

The DTN Meteorlogix Weather Service forecast said mainly dry conditions are on tap for Tuesday in the western Midwest. Scattered thunderstorms, 0.30-1.00 inch and locally heavier, are expected for Wednesday, with mainly dry conditions Thursday. Temperatures will average above normal today and Wednesday, and near normal Thursday.

 

In the eastern Midwest, mainly dry conditions are seen for today, with scattered showers and thundershowers on tap for Wednesday and Thursday. Temperatures will average near to above normal Wednesday and Thursday, Meteorlogix said.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Tuesday, cash dealers said. Spot cash soybean bids were up 2-cents in Des Moines, IA, and up 3-cents in St Louis, MO, according to cash sources Monday.

 

Rotterdam soybeans and soymeal prices were steady to lower, and European vegoils were steady to lower.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Tuesday on a technical rebound, with the recovery of other local commodities lending some support, analysts said. The benchmark September 2006 soybean contract settled RMB12 higher at RMB2,641 a metric tonne, after trading between RMB2,631 and RMB2,647/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended mixed Tuesday, with the benchmark contract closing lower amid late selling pressure on an otherwise uneventful trading day. The benchmark August CPO contract was in positive territory for most of the day until a bout of speculative selling interest emerged in the last minute of the day.