August 1, 2006

CBOT Soy Outlook on Tuesday: Down 2-3 cents, e-CBOT, midwest rains

 

Soybean futures at the Chicago Board of Trade are seen starting Tuesday's day session trading lower, in tune with overnight action, as moderating weather conditions continue to reduce risk premium from prices.

 

Soybeans are called to open 2 to 3 cents lower.

 

In e-CBOT trade, August soybeans were 3 1/2-cents lower at US$5.76, and November soybeans were 3 1/4-cents lower at US$5.96 1/2 per bushel.

 

Soybeans are set to open lower, with the dominant focus of the market on rains coming through the Midwest in the next few days, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The market is poised to start lower, as rains at this point in the season can greatly help the soy crop, but no "knock out blow" is expected, with continued deterioration in ratings limiting downside pressure, Roose added.

Market technicians said prices are in the lower portion of a wide trading range seen over the past six months.

 

There is a strong technical support zone located between US$5.85 and US$5.92, basis November futures. The next downside price objective is closing prices below solid support at the June low of US$5.91, and will take a close above solid technical resistance at last week's high of US$6.14 1/2 to provide some fresh upside technical momentum.

 

First resistance for November soybeans is seen at US$6.04 - Monday's high - and then at US$6.10. First support is seen at US$5.93 1/2 - Monday's low - and then at US$5.91.

 

The DTN Meteorlogix Weather Service forecast said Tuesday's U.S. and European models are in fair agreement.

 

The ridge of high pressure which has brought another round of hot, dry weather to the Midwest will move off far enough to the east during the next 24-48 hours to allow for some significant rainfall in the dry areas of the northwest corn-belt.

 

Next week offers very little in the way of follow-up rainfall for the Midwest. The upper-atmosphere dome of high pressure which produced the current heat wave - the worst since the blast of 1995 in Illinois - will make a return appearance to the region, Meteorlogix reports. Western Midwest crops will again be stressed by above-normal temperatures and below-normal precipitation. Eastern Midwest areas will have normal- to above-normal temperatures and normal- to below-normal precipitation, Meteorlogix forecasts.

 

Meanwhile, the era of side-by-side ag trading begins Tuesday at 9:30 a.m. CDT.

 

Soybean crop ratings dropped 1 percentage point in the good-to-excellent category. The U.S. Department of Agriculture reported that 53% of the U.S. soybean crop was in good-to-excellent shape as of July 30. Minnesota crops rated as good-to-excellent slipped by 4 percentage points in their top-rated category, Iowa soybeans fell 6 percentage points to 55%. Illinois soybeans increased 3 percentage points to 67% good-to-excellent, Indiana crops increased 2 percentage points at 66% in the same category, while Ohio crop conditions improved 2 percentage points to 62% good-to-excellent.

 

Eighty seven percent of soybeans are blooming, the USDA reported, up 11 percentage points from the week prior. Fifty three percent of the U.S. soybean crop is setting pods, up 21 percentage points from last week and 12 percentage points ahead of the five-year average, according to the report.

 

In deliveries, a total of 1,219 delivery notices were posted against the August soybean future. The house account at Term Commodities issued 898 of the receipts. The last trade date assigned was July 28. A reported 683 delivery notices recirculated against the August soymeal contract. The trade date assigned was July 24.

 

In news, Taiwan's Breakfast Soybean Procurement Association in Kaohsiung will tender for up to 60,000 metric tonnes of either U.S. soybeans or Brazilian soybeans in for September-October delivery Wednesday.

 

Rotterdam soybeans were higher and soymeal prices were lower. European vegoils were flat to higher.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower, pressured by spot market prices and overstocking. The benchmark September contract settled RMB3 lower at RMB2,399 a metric tonne, after trading between RMB2,392 and RMB2,416/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply higher Tuesday, with the benchmark contract reaching a 26-month high, as a two-month-long rally showed no signs of abating. The benchmark October CPO contract ended at MYR1,673 a metric tonne, up MYR32 from Monday after moving between MYR1,632 and MYR1,690/tonne.