July 5, 2006

 

CBOT Soy Outlook on Wednesday: Down 1-2 cents; e-CBOT, stabilizing recent gains

 

 

Soybean futures on the Chicago Board of Trade are seen starting Wednesday's session modestly lower, following the overnight theme, as the market attempts to stabilize following recent gains.

 

Soybeans are called to open 1 to 2-cent lower.

 

In overnight electronic trade, July soybeans were 3 1/2 cents lower at US$5.98, November soybeans were 2 1/2 cents lower at US$6.26 3/4, while July soymeal was US$0.90 lower at US$174.80 and December soyoil was 25 points lower at 27.02 cents per pound.

 

Supportive long-range weather forecasts are expected to underpin futures, but after a week of solid price gains, futures are overdue to pull back, analysts said.

 

Early morning forecasts continue to point toward warmer and drier conditions in longer range forecasts, but with favorable near-term conditions, futures have little fresh incentives to attract fresh aggressive buying, said a CBOT commission house broker.

 

However, futures remain in a volatile weather market, and any shift in forecasts could generate fresh momentum, with modest declines in crop ratings and firmer outside inflationary markets providing underlying support, traders add.

 

Technical analysts said recent price gains have allowed futures to regain some good near-term technical momentum. The next upside price objective for the November soybeans is closing prices above solid technical resistance at the June high of US$6.35. A close back below solid support at US$6.12 1/2 - the bottom of the recent upside price gap on the daily bar chart - would provide some fresh downside technical momentum.

 

First resistance for November soybeans is seen at US$6.32 - Monday's high - and then at US$6.35. First support is seen at US$6.23 - Monday's low - and then at US$6.18.

 

The DTN Meteorlogix Weather Service forecast said Wednesday's U.S. and European models are in fair to good agreement. Early next week, the trough in the eastern Midwest weakens and lifts northward, allowing the ridge in the western Midwest to come eastward. The 8-10 day maps show a trough over the eastern Midwest of just east of the Midwest. The next downstream trough is over the northwest U.S., Meteorlogix said.

 

The 6-10 day forecast calls for above normal temperatures in the western Midwest with temperatures averaging near to above normal in the eastern belt. Precipitation is seen near to below normal during this period, Meteorlogix said.

 

U.S. Department of Agriculture reported 64% of U.S. soybeans were in good-to-excellent condition as of Sunday, down three percentage points from last week, but six percentage points higher than last year at the time. Traders expected soybean crop condition to be unchanged to 1-2 percentage points lower. Illinois soybeans fell three percentage points to 65% good to excellent from a 68% last week, Ohio fell two percentage points to 58% good to excellent, and Iowa fell four points to 71%. Indiana maintained last week's good-to-excellent rating of 59%.

 

The 18-state blooming average is 18%. While the 18-state average is three times last week's number, Indiana and Michigan have reported no blooming, the USDA reported.

 

In deliveries, a total of 1,482 delivery notices were redelivered against the July soybean future. The last trade date assigned was July 3. A total of 28 delivery notices were redelivered against July soyoil, with the house account at ADM Investor Services the principle stopper of 25 lots. The last trade date assigned was June 26. 630 delivery notices were posted against the July soymeal contract, with the house account at ADM Investor Services stopping 394 lots. The trade date assigned was June 27.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Wednesday, cash dealers said. Spot cash soybean bids were up 5 cents in Sioux City, Iowa, down 3 cents in Peoria, Ill., and down 3 cents in St, Louis, Mo., according to cash sources Wednesday.

 

Rotterdam soybeans were mixed and soymeal prices were flat to lower. European vegoils were mixed.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Wednesday in an oversupplied market, while losses in other commodities also pressured prices. The benchmark September contract fell RMB7 to settle at RMB2,582 a metric tonne, after trading between RMB2,568/tonne and RMB2,597/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended marginally lower Wednesday after an uneventful session. The benchmark September CPO contract ended at MYR1,487 a metric tonne, down MYR2 from Tuesday.