July 7, 2009

 

CBOT Soy Outlook on Tuesday: Seen up on crop ratings, outside market support

 

 

Chicago Board of Trade soybean futures are expected to start Tuesday's day session on firm footing, bouncing back from prior losses on supportive crop ratings and a lack of outside market pressure.

 

CBOT soybean futures are seen opening 5 cents to 7 cents higher.

 

The unexpected slip in weekly crop ratings proved to be a bullish development for prices overnight and with the burden of weak outside markets taken away, short covering is expected to emerge amid trader ideas recent sharp declines were overdone, a CBOT floor analyst said.

 

The U.S. dollar is lower, crude oil is higher and metals are up in early market action.

 

Meanwhile, the uncertainty of 2009 crop production with a long growing season ahead and the crop having little room for error amid tight old crop inventories remains an underpinning feature.

 

A technical analyst said the next upside price objective for November soybeans is to push and close prices above solid technical resistance at last week's high of US$10.29 1/4 a bushel. The next downside price objective is pushing and closing prices below solid technical support at last week's low of US$9.43 1/2 a bushel.

 

Soybeans were rated 66% good to excellent as of Sunday, compared to 68% last week, according to U.S. Department of Agriculture. The rating was below expectations, with traders expecting to see the condition rating stay unchanged or rise one percentage point from last week.

 

Despite the lower overall rating, the condition of the crop improved in some key states. In Iowa, the good-to-excellent rating rose two percentage points from last week, to 80%. In Illinois, 60% of the crop was seen as good to excellent, up five percentage points from last week.

 

The decline in the overall condition rating has the potential to "make people a little more nervous in soybeans than the corn" because the soy market is already worried about a tight supply situation, said Jerry Gidel, analyst with North America Risk Management Services.

 

Overall, soybeans were 96% emerged, compared to the average of 98%, and 14% blooming, compared to the average of 24%, the USDA said.

 

The DTN Meteorlogix weather forecast has no significant concerns for crops in the Midwest during the next 10 days. A ridge will approach and bring a short period of hot temperatures with it, but then the ridge backs off again.

 

Showers and cooler conditions during the past couple of days in the Delta helped ease stress to soybeans. However, more rain is needed to end concerns... especially through southern areas where it has been quite hot during the past week, Meteorlogix said.

 

In deliveries, July soyoil deliveries totaled 2,972 lots. Customer accounts at Man Professional Clearing issued 2,972 lots, while stopping 1,635 lots. The last trade date assigned was July 6.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Tuesday, following losses on CBOT Monday. The most actively traded January 2010 soybean contract settled RMB4 a metric tonne lower at RMB3,621/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Tuesday, extending Monday's losses on long liquidation amid a lack of fresh leads, trade participants said. The benchmark September CPO contract on the Bursa Malaysia Derivatives ended MYR60 lower at MYR2,069 a metric tonne.