CBOT Soy Outlook on Tuesday: Up following overnight action, technical buys

 

 

Soybean futures on the Chicago Board of Trade are expected to start Tuesday's day session higher, following the overnight theme on technically inspired buying.

 

CBOT soybean futures are seen opening 10 cents to 12 cents higher.

 

CBOT soybean prices were higher overnight. August climbed 14 3/4 cents a bushel to US$10.36 and November rose 11 3/4 cents to US$9.18 1/4.

 

The inability on the market to challenge underlying support levels Monday is expected to spark a short covering bounce in the absence of fresh bearish news, analysts said.

 

A slightly lower U.S. dollar is seen providing underlying support, but outside markets aren't generating much leadership in early trade.

 

Traders said lingering reports of Chinese buying interest and tight old crop inventories should keep prices supported, but the lack of a weather threat will limit upside potential in new crop futures.

 

Otherwise, traders anticipate futures will continue to trade in a sideways range, watching outside markets and weather forecasts for direction.

 

A technical analyst said first resistance for November soybeans is seen at Monday's high of US$9.16 1/4 and then at US$9.25. First support is seen at US$9.00 and then at US$8.90.

 

DTN Meteorlogix said there is still no sign of significant heat stress to Midwest crops either this week or next week. Cool and sometimes very cool weather will keep development of crops slow, Meteorlogix said in the forecast.

 

U.S. Department of Agriculture on Monday rated 67% of the U.S. soybean crop as good-to-excellent, unchanged from last week. U.S. soybean crop conditions were expected to hold steady in the combined good and excellent categories.

 

The condition ratings were not a surprise, as favorable weather conditions kept the crop in good shape, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

The crop was 63% blooming, compared with 60% last year and the average of 76%, according to the USDA. Twenty percent of the crop was reported setting pods, up from 19% last year, while below the five-year average of 36%.

 

The development pace of the crop is equal to or ahead of last year's pace, showing the crop is holding its own after threatening to fall behind last year's pace recently, Scoville said.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday, with analysts saying it could be due to speculative funds. The benchmark May 2010 soybean contract settled RMB12 a metric tonne higher at RMB3,514/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher Tuesday, tracking strong soyoil gains in after-hours trade and the Dalian Commodity Exchange. The benchmark October CPO contract on the Bursa Malaysia Derivatives ended MYR42 higher at MYR2,140 a metric tonne.