June 26, 2007

 

CBOT Soy Outlook on Tuesday: Down 1-3 cents; positioning ahead of Friday reports

 

 

Chicago Board of Trade soybean futures are expected to start Tuesday's day session modestly lower, in line with overnight declines, as traders position themselves ahead of Friday's crop reports, analysts said.

 

CBOT soybean futures are called to start the session 1 to 3 cents lower.

 

In overnight e-CBOT trading, July soybeans were 3 1/2 cents lower at US$8.00 3/4 per bushel, and November was 3 1/2 cents lower at US$8.35.

 

The market should initially take on a defensive posture, pressured by weakness in Asian markets, but without fresh fundamental news traders will prepare for Friday's acres and stocks report as the key growing period for soybeans lies ahead, said Don Roose, president US Commodities in West Des Moines, Iowa.

 

A technical analyst said no serious chart damage has occurred from the recent sell-off, but the bulls have faded. Nevertheless, market bulls still have the technical advantage. The next upside price objective for November soybeans is closing prices above solid technical resistance at US$8.47 1/2, which would fill on the upside last week's downside price gap on the daily bar chart. The next downside price objective is closing prices below solid support at last week's low of US$8.25.

 

First resistance for November soybeans is seen at Monday's high of US$8.40 and then at US$8.47 1/2. First support is seen at US$8.30 and then at US$8.25.

 

The DTN Meteorlogix Weather Service forecast said recent rainfall and cooler temperatures have maintained favorable growing conditions for crops in the western Midwest, although parts of Minnesota are still too dry. In the eastern Midwest, recent shower and thundershower activity has helped to ease moisture stress to developing corn and soybeans, especially in Illinois and parts of Indiana. It is still too dry over northern and eastern Indiana, Ohio and Michigan. The southern part of this region may see beneficial rainfall within the next few days, Meteorlogix reports.

 

U.S. Department of Agriculture in its crop progress report Monday said U.S. soybeans in good-to-excellent condition improved by 1 percentage point to 66% from last week's 65%. Analysts had predicted a condition ratings increase of 2-4 percentage points.

 

Illinois's good-to-excellent condition ratings rose 13 percentage points to 65%. Indiana's soybean good-to-excellent condition rating was unchanged at 43%, while Ohio's good to excellent rating was down 3 percentage points from last week.

 

Analysts said the slightly lower than expected increase in ratings was not a surprise, adding that soybean conditions still have time to improve if eastern Midwest crops receive some needed rain.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended lower Tuesday, falling for a third straight day amid pressure from falling exports, expectations of higher stocks and weak technical conditions. The benchmark September contract ended at MYR2,348 a metric tonne, down MYR24 from Monday.

 

On Singapore's Joint Asian Derivatives Exchange, volume was thin at 10 lots. September CPO ended at US$679/tonne, down US$8 from Monday.

 

Soybean futures traded on the Dalian Commodity Exchange settled mostly lower Tuesday on ample supply and weak demand. The benchmark January 2008 soybean contract settled RMB10 lower at RMB3,217 a metric tonne.