May 31, 2006

 

CBOT Soy Outlook on Wednesday: Down 2-3 cents; following overnight theme

 

 

Soybean futures on the Chicago Board of Trade are seen starting Wednesday's session on the defensive, following the overnight theme, with declines in outside markets and favorable planting and crop development weighing on prices.

 

Soybeans are called to open 2 to 3 cents lower.

 

In overnight electronic trade, July soybeans were 3 cents lower at US$5.80 1/2, July soymeal was US$0.20 lower at US$171.70 and July soyoil was 18 points lower at 25.22 cents per pound.

 

The lack of fresh fundamental support in the absence of upside momentum from outside inflationary markets have futures poised for a lower start, analysts said.

 

Favorable outlooks for plantings and development coupled with expected weakness in the neighboring corn market is expected to apply pressure to prices as well. However, analysts say traders continue to focus on outside inflationary market influences and soyoil's relationship with the energy sector could lead to upside movement if crude oil turns higher.

 

The market is expected to remain in a sideways pattern unless new developments arise, with end of the month positioning allowing prices to hold at current levels, said a CBOT commission house broker.

 

Meanwhile, market technicians say July soybeans still have downside technical momentum, with the next key downside price objective technical support at the April low of US$5.68 1/4. A close below support at last week's low of US$5.80 would also be near-term bearish, while a close back above resistance at US$5.95 would provide some fresh upside technical momentum.

 

First resistance for July soybeans is seen at US$5.86 and then at US$5.89--last week's high--and then at US$5.95. First support is seen at US$5.82 1/2--Tuesday's low-and then at US$5.80.

 

The DTN Meteorlogix Weather Service forecast said there is a chance for scattered showers in the western Midwest Wednesday, with mainly dry conditions on tap for Thursday and Friday. Temperatures will average near to above normal during the three day period.

 

In the eastern Midwest, a chance for scattered showers and thundershowers are on tap for Wednesday and Thursday. This activity may be heaviest in the eastern and southern reaches of eastern Midwest. Mainly dry conditions are seed for Friday. Temperatures will average near to above normal, during this time frame, Meteorlogix said.

 

The U.S. Department of Agriculture reported Tuesday that 79% of the U.S. soybean crop had been planted as of Sunday, on par with last year's pace and ahead of the five-year average of 68%. Analysts had expected the percentage of the crop planted between 78%-80%. Forty-two percent of the crop has emerged compared to 47% in 2005 and the five-year average of 39%.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Wednesday, cash dealers said. Spot cash soybean bids were up 5 1/2 cents in Peoria, Ill, up 3 cents in Des Moines, IA, and up 8 cents in St Louis, MO, according to cash sources Wednesday.

 

Rotterdam soybeans prices were higher while soymeal prices were lower. European vegoils were mixed.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Wednesday, pressured by a slump in copper futures, analysts said. The benchmark September 2006 soybean contract settled RMB12 lower at RMB2,649 a metric tonne, after trading between RMB2,640/tonne and RMB2,662/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly higher Wednesday, supported by stronger soyoil futures and slightly better-than-expected export estimates. The benchmark August CPO contract ended at MYR1,444 a metric tonne, up MYR5 from Tuesday.