July 31, 2007

 

CBOT Soy Outlook on Tuesday: Up 3-5 cents; weather, crop rating declines

 

 

Chicago Board of Trade soybean futures are seen starting Tuesday's day session higher, as the market slowly adds premium back into prices on supportive near term weather and declining crop ratings.

 

CBOT soybean futures are called to start the session 3 to 5 cents higher.

 

In overnight e-CBOT trading, August soybeans were 5 1/4 cents higher at US$8.28 per bushel, and November was 3 1/4 cents higher at US$8.51.

 

The 2007 U.S. soybean crop has enough uncertainties heading into its critical growth period relating to weather to keep a near-term floor under prices, analysts said.

 

Forecasts for hot, dry Midwest weather this week is seen stressing some filling bean crops, particularly in parched areas of the northwestern Midwest, traders said. This uncertainty, coupled with technical buying following recent declines and bullish longer range supply outlooks, is expected to support the market until fresh fundamental news arises, a CBOT floor analyst said.

 

A market technician said prices are in a sideways trading range on the daily bar chart. The next downside price objective for November soybeans is closing prices below solid support at last week's low of US$8.34. The next upside price objective is closing prices above solid technical resistance at US$8.69 1/2, which would fill on the upside this week's downside price gap on the daily bar chart.

 

First resistance for November soybeans is seen at US$8.50 and then at US$8.55. First support is seen at Monday's low of US$8.40 and then at US$8.34.

 

U.S. soybean crop ratings dropped three percentage points from the previous week to 58% good to excellent, on par with analysts' predictions of a 1 to 3 percentage-point decline.

 

Illinois crop conditions lost five percentage points, with 73% of the crop rated in good to excellent condition. Minnesota lost 10 percentage points with 38% of its crop in good to excellent condition, and South Dakota's crop ratings dropped eight percentage points to 62% good to excellent. Ohio's top rated crops improved by 5 percentage points to 41% good to excellent.

 

Eighty-five percent of the crop was reported blooming, compared to 75% last week, 86% last year and 81% for the five-year average. Fifty-one percent of the crop is setting pods, on par with last year at this time, but above the five-year average of 41%.

 

The DTN Meteorlogix Weather Service forecast has significant changes from Monday's outlook. Less rain is in the forecast for the Midwest next week, with indications of only scattered light to moderate showers Sunday and Monday followed by drier conditions during the middle of next week. The pattern of near- to above-normal temperatures and near- to below-normal rainfall seen during the month of July appears to be continuing into early August.

 

Near-term forecasts call for high temperatures in the upper 80s to middle 90s Fahrenheit along with light showers on Thursday in the western Midwest. Light to moderate showers are seen for Sunday, but soil moisture is expected to continue to deplete and cause some increase in stress to soybeans especially in the dry areas of southwest Minnesota and eastern South Dakota, Meteorlogix reported.

 

In the eastern Midwest, high temperatures in the upper 80s to middle 90s are expected during the next seven days, with only scattered light to moderate showers later Sunday into Monday. The conditions are expected to deplete soil moisture and increase stress, Meteorlogix said in the forecast.

 

Delivery notices posted against August soybean futures totaled 2,228 lots. A customer account at Astron Division of UBS Securities issued 1,746 lots, with a customer account at Rand Financial a featured stopper of 600 lots. The last trade date assigned was July 30.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended lower Tuesday, snapping a five-day winning streak despite data showing a rise in exports in July. The benchmark October contract ended at 2,608 Malaysian ringgit (US$755.82) a metric tonne, down MYR28 from Monday.

 

In Singapore's Joint Asian Derivatives Exchange, CPO trading activity was very slow, with only one lot traded.

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday, supported by rising soyoil prices. The benchmark January 2008 soybean contract settled RMB35 higher at RMB3,389 (US$448.45) a metric tonne.