June 20, 2006

 

CBOT Soy Outlook on Tuesday: Up 1-2 cents; consolidating Monday's declines

 

 

Soybean futures at the Chicago Board of Trade are expected to start Tuesday's session higher, following the overnight theme, as the market consolidates Monday's sharp declines.

 

Soybeans are called to open 1 to 2 cents higher.

 

In overnight electronic trade, July soybeans were 1 1/2-cents higher at US$5.86, November soybeans were 1 3/4-cents higher at US$6.12 3/4, July soymeal was US$0.40 higher at US$178.30 and July soyoil was 5 points higher at 24.25 cents per pound.

 

The market is set to edge higher in turnaround Tuesday fashion following Monday's setback, with futures seemingly prepared to keep some risk premium in the market, particularly with the western belt still maintaining a dry pattern, said Don Roose, president U.S. Commodities in West Des Moines, IA.

 

A quiet news front and unchanged soybean crop ratings are providing little direction for early market movement, traders said.

 

However, the market continues to perform pretty well despite bearish fundamental outlooks, as the market has seemingly reached technical support levels to underpin prices, Roose added.

 

Market technicians say prices are still in a choppy trading range on the daily bar chart, and now in the lower portion of it. The next upside objective for July futures is closing prices above psychological resistance at US$6.00. A close back below technical support at this month's low of US$5.75 1/2 would provide better downside technical momentum.

 

First resistance for July soybeans is seen at US$5.91 1/2--Monday's high--and then at US$5.95. First support is seen at US$5.82 1/2--Monday's low--and then at US$5.80.

 

The DTN Meteorlogix Weather Service forecast said Tuesday's US and European models are in good agreement, with an active weather pattern on tap for the northern Plains, the Midwest and at least the northern and eastern Delta.

 

Scattered showers will tend to favor the northern and eastern areas of the western corn -belt Tuesday. Scattered showers and thundershowers through central and southern locations of the western belt are in store for Wednesday and Thursday. Rainfall potential from central Iowa southward into Missouri is 0.30-1.50 inches during this period, heaviest in Missouri. Temperatures will average near to above normal Tuesday, near to below normal Wednesday, and below normal Thursday, Meteorlogix said.

 

In the eastern Midwest, mainly dry conditions with only a few light showers in the northwest areas Tuesday. Scattered showers and thundershowers develop in the north and spread southward Wednesday and Thursday. Temperatures will average above normal Tuesday and Wednesday, near to below normal north and above normal south Thursday, Meteorlogix added.

 

Meanwhile, soybean crop ratings were unchanged in the good-to-excellent category. The U.S. Department of Agriculture reported that 67% of the U.S. soybean crop was in good-to-excellent shape as of June 18, up from last year's 63% good-to-excellent rating.

 

The USDA said 97% of the U.S. soybean crop had been planted, on par with last year's 96% seeded, but above the five-year average of 94%. Ninety-two percent of the U.S. soy crop was emerged compared to 91% in 2005 and the five-year average of 86%.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Tuesday, cash dealers said. Spot cash soybean bids were up 8 cents in Bloomington, Ill, up 5 cents in Cedar Rapids, IA, and up 2 cents in Evansville, Ind., according to cash sources Tuesday.

 

Rotterdam soybeans and soymeal prices were lower. European vegoils were lower.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Tuesday, on a new outbreak of bird flu, losses in other commodities futures, and Monday's Chicago Board of Trade soybean futures, analysts and traders said. The benchmark September 2006 soybean contract fell RMB14 to settle at RMB2,600 a metric tonne, after trading between RMB2,590/tonne and RMB2,644/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended a tad lower Tuesday after another range-bound trading day as much-awaited export estimates failed to provide fresh leads. The benchmark September CPO contract ended at MYR1,451 a metric tonne, down MYR4 from Monday.