July 3, 2007

 

CBOT Soy Outlook on Tuesday: Down 2-4 cents, consolidating ahead of holiday

 

 

Chicago Board of Trade soybean futures are seen starting Tuesday's day session on the defensive, as the market consolidates after recent gains heading into the midweek holiday break, analysts said.

 

CBOT soybean futures are called to start the session 2 to 4 cents lower.

 

In overnight e-CBOT trading, July soybeans were 3/4-cents lower at US$8.64 1/4 per bushel, and November was 4 cents lower at US$8.93 3/4.

 

A quiet news front is expected to produce some profit taking and position evening ahead of the holiday, with traders expecting a choppy tone to dominate as many traders reduce some risk after recent gains, analysts said.

 

CBOT markets will be closed Wednesday in observance of the Independence Day holiday.

 

Favorable near-term weather for crop development is seen aiding the lower theme, but with every bushel counted on in 2007 amid smaller acreage coupled with the need to ration demand and buy acres for next year, downside movement is seen limited, analysts added.

 

A technical analyst said market bulls flexed their muscles again Monday and appear poised to push prices still higher. The next upside price objective for November soybeans is closing prices above technical resistance at US$9.50. The next downside price objective is closing prices below solid support at US$8.70.

 

First resistance for November soybeans is seen at US$9.00 and then at the contract high of US$9.03 1/2. First support is seen at Monday's low of US$8.82 and then at US$8.75.

 

U.S. Department of Agriculture in its crop progress report Monday said U.S. soybeans in good-to-excellent condition improved by 2 percentage points to 68% from last week's 66%. Analysts had predicted a condition ratings increase of 1-3 percentage points.

 

Illinois soybean crops gained eight percentage points with a 63% good-to-excellent condition and Indiana gained three percentage points with 46% of the crop in good-to-excellent condition. Ohio crop ratings slipped 2 percentage points to 44% good-to-excellent, and Minnesota conditions dropped four percentage points, with 72% of the crop in good-to-excellent condition.

 

Nineteen percent of the crop was reported blooming, up from 6% last week, 17% last year and 13% for the five-year average.

 

The U.S. Census Bureau revised its May soyoil stocks figure, raising the May stocks figure to 3.283 billion pounds from the 3.266 reported June 28. The figure is down from April's stocks of 3.301 billion pounds and well above the 2.885 billion pounds reported at the same time last year.

 

The DTN Meteorlogix Weather Service forecast said a few afternoon thundershowers are on tap for the western Midwest Tuesday, mainly in the north. Scattered showers and possible thundershowers are seen for Wednesday, before drier conditions return Thursday. Temperatures average near to slightly above normal.

 

In the eastern Midwest, a few afternoon showers are on tap for Tuesday in the north. Scattered showers and possible thundershowers are seen into Wednesday. Showers may linger near the Ohio River early Thursday. Temperatures will average near normal Tuesday, near to slightly above normal Wednesday and Thursday, Meteorlogix forecasts.

 

Deliveries notices posted against July soybean futures totaled 2,532 lots. A customer account at Man Professional Clearing issued 1,081 lots, stopped 687 lots. The last trade date assigned was July 2.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended higher Tuesday as strong soyoil, rising crude oil prices and expectations of strong July demand helped lift the market above the key MYR2,500 a metric tonne psychological barrier. The benchmark September contract ended at MYR2,515 a metric tonne, up MYR47 from Monday to reach its highest level since June 11.

 

On Singapore's Joint Asian Derivatives Exchange, CPO futures were also higher, with September up US$12.25 at US$730.25/tonne.

 

Soybean futures traded on the Dalian Commodity Exchange settled slightly lower Tuesday, weighed by a domestic supply glut despite Monday's gains in CBOT soybean futures. The benchmark January 2008 soybean contract fell RMB12 to settle at RMB3,311 a metric tonne.

 

Meanwhile, China's growing demand for soymeal will push the country's soybean imports to 35.8 million metric tonnes by the 2010-11 crop year and 49 million tonnes by 2015/16, an official from a government think tank said Tuesday.