July 14, 2009

 

CBOT Soy Outlook on Tuesday: Seen up; oversold, supportive outside markets

 

 

Chicago Board of Trade soybeans are poised for a higher start to Tuesday's day session, buoyed by technically oversold market conditions and supportive outside market influences.

 

CBOT soybean futures are seen opening 3 cents to 5 cents higher.

 

"The market is overdue for a minor technical correction after recent declines, and without a bearish influence from outside financial markets, futures should find some underpinning support,' a CBOT floor analyst said.

 

In early trading the U.S. dollar is lower, while crude oil and equities are pushing higher.

 

Nevertheless, central U.S. weather is still a bearish feature and crop ratings remain at high levels. The absence of any other fresh news will keep technical factors in play, with traders eyeing movements in outside financial markets.

 

Meanwhile, traders will also watch the expiring July contracts for fireworks in flat prices and spreads. CBOT July contracts expire at 1:00 p.m. EDT.

 

Soyoil futures are set for a higher start, with higher crude oil and a fresh export sale announcement buoying prices. However, a higher than expected soyoil stocks figure in the June crush report could limit advances. Traders are looking for soyoil to advance on meal/oil spread unwinding.

 

A technical analyst said first resistance for November soybeans is seen at Monday's high of US$9.28 1/2 and then at US$9.43 1/2. First support is seen at US$9.00 and then at Monday's low of US$8.92.

 

The DTN Meteorlogix weather forecast said a mostly favorable weather pattern for developing soybeans is on tap for U.S. Midwest. Hot temperatures, if any, will be brief and mainly confined to western and southern areas.

 

In the Delta, cooler weather and increasing shower activity during the next few days is forecast. Crops in the area have been under some stress due to dryness and hot temperatures, but this stressful weather looks to be coming to an end, Meteorlogix said.

 

U.S. Department of Agriculture said that 66% of the U.S. soybean crop was rated good-to-excellent, unchanged from the prior week. Analysts had expected the rating to remain steady or drop by up to two percentage points. The crop rating held steady in Illinois at 60% but dropped in neighboring states, by two percentage points to 62% in Indiana and by three percentage points to 77% in Iowa.

 

The USDA said 24% of the crop was in the blooming stage, up from 14% the previous week but down from the five-year average of 43%.

 

USDA on Tuesday announced private export sales of 42,000 metric tonnes of soyoil for delivery to unknown destinations for the 2008-09 marketing year.

 

National Oilseed Processors Association says 133.1 million bushels of soybeans were crushed in June, down from 142.2 million in May, but in line with the average analyst estimate of 133.7 million. The range of pre-report estimates was 131.0 million to 136.5 million. Soyoil stocks were pegged at 2.907 billion pounds, up from 2.696 billion in May, and above the average analyst estimate of 2.696 billion. The range of estimates was 2.649 billion pounds to 2.770 billion pounds.

 

In overseas markets, soybean futures fell on China's Dalian Commodity Exchange Tuesday, extending losses on supply concerns that were accentuated with weakening oil prices last week. The benchmark January 2010 soybean contract lost 0.3% to RMB3,521 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange rose for the first time in two days, along with regional equities and other commodities including crude oil and soyoil, trade participants said. The benchmark September CPO contract on the Bursa Malaysia Derivatives ended MYR46 higher at MYR2,036 a metric tonne.