July 18, 2006

  

CBOT Soy Outlook on Tuesday: Up 1-2 cent, following overnight theme

 

 

Soybean futures on the Chicago Board of Trade are seen starting Tuesday's open auction session with modest gains, following the overnight theme, as the market attempts to stabilize from Monday's sharp declines.

 

Soybeans are called to open 1 to 2 cents higher.

 

In e-CBOT trade, November soybeans gained 1 3/4 cents at US$6.13 per bushel.

 

Monday's declines were a bit overdone, and with dryness still an issue in the northwestern Midwest the soybean market is poised to bounce back in Tuesday's session, said a CBOT commission house broker.

 

A quiet news front is expected to keep technical factors in play, with Monday's bearish price action potentially a sign of future direction without any fundamental support, traders added.

 

However, analysts say some of Monday's losses were attributed to broad based weakness in commodity markets, and without any price pressure from outside inflationary futures, turnaround Tuesday may be the theme of the day.

 

Technical analysts said prices Monday closed near the session low and chart damage was inflicted, with a June 30 upside price gap on the daily bar chart filled on the downside. The market has gained good downside technical momentum, and this month's high of US$6.39 1/2 in November futures is very strong overhead resistance to overcome. November soybeans will have to push above that level to gain solid upside technical momentum, with the next downside price objective for the market major psychological support at US$6.00.

 

First resistance for November soybeans is seen at US$6.15 and then at US$6.18. First support is seen at US$6.11--Monday's low-and then at US$6.07.

 

The DTN Meteorlogix Weather Service forecast said hot and mostly dry weather is expected to stress reproductive corn and soybeans through Thursday in the western Midwest. Cooler temperatures with some scattered showers activity is seen for Friday and Saturday. Overall this continues to be a drier and warm to hot weather pattern for this region, Meteorlogix said. In the eastern belt, hot and mostly dry weather will continue to deplete soil moisture through western and southern areas of the eastern belt during the next 3-4 days before cooler weather arrives, Meteorlogix added.

 

Meanwhile, soybean crop ratings dropped 1 percentage point in the good-to-excellent category. The U.S. Department of Agriculture reported that 57% of the U.S. soybean crop was in good-to-excellent shape as of July 16. Minnesota crops rated in good to excellent shape were standout of the report, falling 16 percentage points in their top rated category. Illinois soybeans increased 2 percentage points to 59% good to excellent, and the Indiana crop also increased 2 percentage points at 61% in the same category. Ohio crop conditions improved 1 percentage point to 61%, and Iowa soybeans remained unchanged at 67% in good-to-excellent condition.

 

Sixty percent of soybeans are blooming, the USDA reported, up 22 percentage points from the week prior. Sixteen percent of the U.S. soybean crop is setting pods, up 9 percentage points from last week and five percentage points ahead of the five-year average, according to the report.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Tuesday, cash dealers said. Spot cash soybean bids were down 6 cents in Peoria, Ill., and up 4 cents in Champaign, Ill., according to cash sources Tuesday.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Tuesday, in step with overnight losses on the Chicago Board of Trade, analysts said. The benchmark September contract fell RMB13 to settle at RMB2,470 a metric tonne, after trading between RMB2,465 and RMB2,479/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply higher Tuesday in busy trading, as the market continued to rally on optimism about biodiesel demand. The benchmark October contract ended at MYR1,555 a metric tonne, up MYR14 from Monday.