June 12, 2007

 

CBOT Soy Outlook on Tuesday: Down 2-4 cents, e-CBOT, consolidating gains

 

 

Soybean futures on the Chicago Board of Trade are seen starting Tuesday's day session lower, taking its cue from overnight trade, as the market attempts to consolidate after Monday's run to new contract highs, analysts said.

 

CBOT soybean futures are called to start the session 2 to 4 cents lower.

 

In overnight e-CBOT trading, July soybeans were 2 3/4 cents lower at US$8.27 1/4 per bushel, and November was 3 1/2 cents lower at US$8.60.

 

A quiet news front isn't providing any early incentives for market bulls, with less threatening weather outlooks and a smaller-than-expected decline in weekly crop ratings opening the door for some sideways to lower trade, a CBOT floor analyst said.

 

However, underlying fundamental and technical support are expected to keep prices underpinned, with sharply higher Malaysian palm oil futures lending strength to soyoil, expected to provide strength to soybeans as well, analysts added.

 

The U.S. Department of Agriculture reported that 70% of the U.S. soybean crop was in good-to-excellent condition, down 1 percentage point from the previous week. Analysts had expected conditions to fall in a range of down 1 to 3 percentage points.

 

In the major soybean states, Illinois soybeans were rated 67% good-to-excellent, down one percentage point from last week, and Iowa was up 2 percentage points at 78%. Indiana saw a drop of 8 percentage points in good-to-excellent ratings to 56% from 64%, and Ohio soybeans fell 3 percentage points to 64% good-to-excellent.

 

Eighty-four percent of the crop had emerged compared to the five-year average of 75%. Ninety-four percent of the crop was reported planted compared to the five-year average of 89%.

 

The DTN Meteorlogix Weather Service forecast said in the western Midwest, thunderstorms Tuesday will be mainly confined to the Dakotas and Nebraska. These storms may move eastward to include northwest Iowa, west and north Minnesota during Wednesday and Thursday. The balance of this region continues mainly dry during this period. Temperatures will average above normal with highs mostly in the 80s to a few very low 90s Fahrenheit.

 

In the eastern Midwest, mainly dry conditions are on tap for Tuesday through Thursday. Temperatures will average above normal with highs in the 80s to a few low 90s F. Mainly dry or with only isolated light showers are forecast for Friday and the weekend, Meteorlogix forecasts.

 

A technical analyst said market bulls have solid upside momentum and are looking for more on the upside in the near term. The next upside price objective for July soybeans is closing prices above solid technical resistance at US$8.50. The next downside price objective is closing prices below solid support at US$8.00.

 

First resistance for July soybeans is seen at Monday's contract high of US$8.37 and then at US$8.50. First support is seen at Monday's low of US$8.22 1/2 and then at US$8.15.

 

In overseas markets, Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply higher Tuesday as the market bounced back from recent heavy losses as concerns about cancellation of purchases eased. The benchmark August contract ended up MYR113 at MYR2,433 a metric tonne.

 

On Singapore's Joint Asian Derivatives Exchange, there was little improvement in trading activity as volumes remained thin at 53 lots.

 

Soybean futures traded on the Dalian Commodity Exchange settled lower Tuesday, pressured by lower imported soybean prices. The benchmark January 2008 soybean contract settled RMB29 lower at RMB3,307 a metric tonne.

 

China imported 2.96 million metric tonnes of soybean in May, the General Administration of Customs said Tuesday. Soybean imports during the first five months of the year totaled 11.34 million tonnes, up 9.2% from a year earlier, preliminary data showed.