June 13, 2006

 

CBOT Soy Outlook on Tuesday: Down 4-6 cents; scaling back monday's gains

 

 

Chicago Board of Trade soybean futures are seen starting Tuesday's session on the defensive, scaling back recent gains on selling pressure associated with declines in outside markets and ideas Monday's sharp gains were overdone.

 

Soybeans are called to open 4 to 6 cents lower.

 

In overnight electronic trade, July soybeans were 6 1/2 cents lower at US$5.93 1/2, July soymeal was US$1.10 lower at US$180.10 and July soyoil was 14 points lower at 25.16 cents per pound.

 

The market is poised to consolidate Monday's gains, with opening indicators from declines in precious metals and energy markets setting the stage for the setback, said a CBOT commission house broker.

 

Weather forecasts continue to point to warmer and drier crop conditions, but without any prolonged heat and dryness, the market may have gotten a little ahead of itself Monday, he added.

 

The DTN Meteorlogix Weather Service forecast said mainly dry conditions with only isolated light showers are on tap for the western Midwest in the next three days. Temperatures will average near to above normal. Mainly dry weather and hotter temperatures will increase stress to crops during the five-day period, especially in western areas of the region, Meteorlogix added.

 

In the eastern Midwest, mainly dry conditions with only a few light showers during a three-day period will be common. Temperatures will average near to below normal Tuesday and Wednesday, and near to above normal Thursday, Meteorlogix said.

 

Meanwhile, soybean crop ratings were down modestly in the good-to-excellent category, but analysts say given how early it is in the season the drop in conditions is not significant, particularly with ratings still holding above year ago levels. The U.S. Department of Agriculture reported that 67% of the U.S. soybean crop was in good-to-excellent shape as of June 11, up from last year's 64% good-to-excellent rating.

 

The USDA said 94% of the U.S. soybean crop had been planted, on par with last year's 94% seeded, but above the five-year average of 89%. Eighty four percent of the U.S. soy crop was emerged compared to 83% in 2005 and the five-year average of 75%.

 

Technical analysts say the next upside price objective for July futures is closing prices above this month's high of US$6.11. A close back below technical support at US$5.80 would provide better downside technical momentum.

 

First resistance for July soybeans is seen at US$6.05--Monday's high--and then at US$6.11. First support is seen at US$5.95--Monday's low--and then at US$5.92 1/2.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Tuesday, cash dealers said. Spot cash soybean bids were down 11 cents in Frankfort, Ind., down 2 1/2 cents in Peoria, Ill., and up 1-cent in St Louis, Mo., according to cash sources Tuesday.

 

Rotterdam soybeans were higher and soymeal prices were mostly higher. European vegoils were mixed.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled slightly lower Tuesday on profit-taking after Monday's gains. The benchmark September 2006 soybean contract fell RMB8 to settle at RMB2,633 a metric tonne, after trading between RMB2,628/tonne and RMB2,645/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Tuesday as the market, bereft of fresh leads, was weighed down by weakness in other commodities. Benchmark August CPO futures ended at MYR1,459 a metric tonne, down MYR8 from Monday, after moving between MYR1,457 and MYR1,474/tonne.