June 27, 2006
CBOT Soy Outlook on Tuesday: Seen up 1-2 cents; recovering recent losses
Chicago Board of Trade soybean futures are seen starting Tuesday's open auction session higher, staging a modest recovery from recent 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$5.71, November soybeans were 1 3/4-cents higher at US$5.96 1/4, December soymeal was US$0.70 higher at US$176.60 and December soyoil was 7 points higher at 25.55 cents per pound.
The market is poised for some turnaround Tuesday action, with unchanged weekly crop ratings and uncertainty associated with Friday's acreage and stocks reports providing underlying support to prices, analysts said.
A quiet news front and unchanged soybean crop ratings are providing little direction for early market movement, traders said.
However, the market has extracted a fair amount of weather premium from prices and maybe due to consolidate, particularly with active contracts reaching oversold conditions approaching Friday's key crop reports, said a CBOT commission house broker.
The relative strength index for November soybeans stood at 30.36 as of Monday's close. A RSI reading of 30.00 and below is considered oversold.
Meanwhile, technical analysts said serious near-term chart damage was inflicted on the bean market Monday, with prices seeing a bearish downside "breakout" from a choppy trading range on the daily bar chart. The next downside price objective for the bears is closing prices below solid technical support at the April low of US$5.85 1/2. It will take a close back above resistance at US$6.05 a bushel to fill Monday's downside price gap and begin to provide the bulls with some fresh upside technical momentum.
First resistance for November soybeans is seen at US$6.00--Monday's high--and then at US$6.05. First support is seen at US$5.91--Monday's low--and then at US$5.85 1/2.
The DTN Meteorlogix Weather Service forecast said a lack of significant heat along with episodes of scattered showers will favor developing crops in the western Midwest. There are some dry areas in central and southeast Iowa that could use more rain however the situation is not critical, Meteorlogix said.
In the eastern Midwest, except for a few dry areas in central and southern Illinois, soil moisture is favorable. Occasional showers and no significant heat should maintain favorable growing conditions overall, Meteorlogix said.
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 25, up from last year's 59% good-to-excellent rating.
The USDA said 97% of the U.S. soybean crop was emerged, on par with last year's 96%, but above the five-year average of 92%. Six percent of the U.S. soy crop was blooming compared to 5% in 2005 and the five-year average of 4%.
Taiwan Sugar Corp., or TSC, has rejected all the bids in its tender to buy 25,000 metric tonnes of U.S.-origin corn and 10,000 tonnes of U.S.-origin soybeans, said a trader in Taipei.
U.S. Midwest cash soybean basis bids are mostly unchanged Tuesday, cash dealers said. Spot cash soybean bids were down 1-cent in Keokuk, IA, up 5 1/2-cent in Peoria, Ill, and down 3-cent in St. Louis, according to cash sources Tuesday.
Rotterdam soybeans were lower and soymeal prices were mostly lower. European vegoils were mixed.
In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Tuesday, pressured by sharp falls in Chicago Board of Trade soybean futures overnight. The benchmark September contract fell RMB19 to settle at RMB2,565 a metric tonne, after trading between RMB2,555/tonne and RMB2,577/tonne.
Crude palm oil futures on the Bursa Malaysia Derivatives ended marginally lower after a listless trading day Tuesday as most participants remained on the sidelines to wait for fresh cues. The benchmark September CPO contract ended at MYR1,463 a metric tonne, down MYR2 from Monday.
