June 28, 2006
CBOT Soy Outlook on Wednesday: Flat-up; consolidates ahead of USDA reports
Soybean futures on the Chicago Board of Trade are seen starting Wednesday's open auction session with a steady to firmer undertone, as the market continues to consolidate ahead of Friday's key acreage of stocks reports.
Soybeans are called to open flat to 1-cent higher.
In overnight electronic trade, July soybeans were 1-cent higher at US$5.79, November soybeans were flat at US$6.03 1/2, December soymeal was flat at US$173.10 and December soyoil was flat at 26.18 cents per pound.
A quiet news front, with mostly benign weather conditions across the Midwest is expected to promote sideways or two-sided price action following Tuesday's technical bounce from oversold conditions, analysts said.
Generally favorable near term weather is expected to cap upside movement, but concerns over potential heat and lingering dryness in parts of the western belt keep prices underpinned, traders add.
Nevertheless, the critical growing stage for soybeans remains in August, and this will keep speculative interest overshadowing current weather, with positioning ahead of an anticipated smaller soybean acreage figure in Friday's report a key driver of prices, said a CBOT commission house broker.
Technical analysts said while serious near-term chart damage has been inflicted on the soybean market recently, some of that damage was repaired Tuesday. The next major downside price objective for November futures 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$6.10 a bushel to provide some fresh upside technical momentum.
First resistance for November soybeans is seen at US$6.06 - Tuesday's high - and then at US$6.10. First support is seen at US$6.00 and then at US$5.94 1/2, Tuesday's low.
The DTN Meteorlogix Weather Service forecast said Wednesday's U.S. and European models are in fair to good agreement during the 6-10 day period. The U.S. model features a ridge center over the central Rockies and western Plains. This is in a position to push hot and dry weather into the northern plains and southern Canadian Prairies. The European model shows a ridge center over the northeast plains and the northwest Midwest region.
Should the model be verified, then the hotter and drier region would be further east, including the northwest Midwest and the northern plains but maybe not the western Canadian Prairies.
Any hot weather in the western Midwest during a 10-day period is expected to be brief and mainly confined to west locations. Rainfall chances continue to be low. In the eastern Midwest, no significant stress to corn or soybeans is expected during the 10 day period, however it may be a little on the hot side for 1-3 days within this period, Meteorlogix said.
U.S. Department of Agriculture is scheduled to release its acreage and quarterly grain stocks report Friday, 7:30 a.m. CDT. The average of analyst's estimates pegs soybean acreage at 75.132 million acres and June 1 stocks at 1.012 billion bushels.
Meanwhile, USDA confirmed late Tuesday an Asian soybean rust observation in Brooks county Georgia.
U.S. Midwest cash soybean basis bids are mostly unchanged Wednesday, cash dealers said. Spot cash soybean bids were up 1-cent in Keokuk, IA, down 10-cents in Bloomington, Ill, and up 1-cent in St. Louis, according to cash sources Wednesday.
Rotterdam soybeans and soymeal prices were mostly higher. European vegoils were mixed.
In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly higher Wednesday, following gains in Chicago Board of Trade soybean futures. The benchmark September contract rose RMB8 to settle at RMB2,573 a metric tonne.
Crude palm oil futures on the Bursa Malaysia Derivatives ended a tad higher Wednesday after yet another range-bound, unexciting day. The September CPO contract ended at MYR1,467 a metric tonne, up MYR4 from Tuesday. The contract was confined to a very narrow band of MYR1,466-MYR1,471/tonne.
