May 30, 2006

 

CBOT Soy Outlook on Tuesday: Seen firm on inflationary pressures

 

 

Chicago Board of Trade soybean futures are seen starting Tuesday's open auction session on the firm side, following the overnight theme as strength in outside inflationary markets buoy prices.

 

Soybeans are called to open 1 to 3 cents higher.

 

In overnight electronic trade, July soybeans were 2 1/2 cents higher at US$5.85, July soymeal was US$1.00 higher at US$174.30 and July soyoil was 10 points higher at 25.21 cents per pound.

 

Higher silver, gold, crude oil futures and weakness in the U.S. dollar versus other major currencies are providing upward signals to traders to start the week, with recent heat in the Midwest encouraging traders to keep some premium in prices, analysts said.

 

The absence of fresh fundamental news will keep traders' eyes on the movement of outside markets for keys to speculative interest, as the market braces for the volatile summer growing season, said a CBOT commission house broker.

 

Meanwhile, technical analysts say a steep 2-week-old downtrend is still in place on the daily bar chart for July soybeans. The next downside price objective is technical support at the April low of US$5.68 1/4. It will take a close back above resistance at US$5.95 to provide some fresh upside technical momentum.

 

First resistance for July soybeans is seen at US$5.85 and then at US$5.89 - last week's high - and then at US$5.95. First support is seen at US$5.80 - last week's low - and then at US$5.75.

 

The DTN Meteorlogix Weather Service forecast said scattered showers and thunderstorms are on tap through eastern and southern Iowa, southeast Nebraska, and north and central Missouri during Tuesday and Wednesday. Only a few light showers are expected elsewhere in the region during that time-frame. Temperatures will average near to below normal Tuesday and Wednesday, and near to above normal Wednesday.

 

In the eastern Midwest, scattered showers and thundershowers are seen for Tuesday and Wednesday, before drier conditions emerge Thursday. Temperatures will average above normal Tuesday, near to above normal Wednesday, and near to below normal Thursday, Meteorlogix said.

 

The Commodity Futures Trading Commission said Friday in its commitments of traders report that large speculative traders held net short futures and options positions totaling 13,887 lots in soybeans as of May 23, compared to the previous week's net longs of 10,290 lots. In soyoil large specs held net long positions of 54,728 compared to 65,531 lots in the previous week. Large specs held net short positions of 27,430 in soymeal, up from net shorts of 15,196 lots reported in the previous week.

 

On tap for Tuesday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report 10:00 a.m. CDT and its weekly crop progress report at 3:00 p.m. CDT. Traders anticipate soybean plantings in the area of 80% complete Tuesday.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Tuesday, cash dealers said. Spot cash soybean bids were up 2 1/2 cents in Peoria, Ill., up 3 cents in Evansville, Ind., and up 2 cents in St Louis, according to cash sources Tuesday.

 

Taiwan's Breakfast Soybean Procurement Association, or BSPA, is seeking 30,000-60,000 metric tonnes of U.S. or South American soybeans in a tender Thursday.

 

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

 

In overseas markets, China's soybean futures settled mostly higher on Tuesday, led largely by expectations of gains in CBOT soybean futures once trading resumes there on Tuesday after a long weekend. The benchmark September 2006 soybean contract settled RMB7 higher at RMB2,661 a metric tonne, after trading between RMB2,646/tonne and RMB2,670/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended mixed Tuesday after a range-bound, dull trading day as lingering concerns about slow demand continued to keep a lid on prices. The benchmark August CPO contract ended at MYR1,439 a metric tonne, up MYR2 from Monday. The contract was confined to a narrow range of between MYR1,435 and MYR1,442/tonne.