August 7, 2007

 

CBOT Soy Outlook on Tuesday: Down 2-3 cents; rains promoting defensive tone

 

 

Chicago Board of Trade soybean futures are seen starting Tuesday's day session weaker, continuing the overnight theme, as rains moving across the Midwest keeps pressure on the market.

 

CBOT soybean futures are called to start the session 2 to 3 cents lower.

 

In overnight e-CBOT trading, August soybeans were 3/4-cent higher at US$8.26 3/4 per bushel, and November was 2 3/4 cents lower at US$8.47 1/4.

 

The rains in the Midwest crop belt and a lack of any surprises in Monday's weekly crop ratings are keeping a defensive tone in the market, as there isn't any fresh supportive news out to inspire bullish enthusiasm, said Dax Wedemeyer, analyst with U.S. Commodities in West Des Moines, Iowa.

 

The market is focused on the premise that rain makes grain and that is taking center stage while traders position themselves ahead of Friday's crop production report, a CBOT floor analyst said.

 

Meanwhile, underlying technical support and lingering worries over crops in the southern Midwest remain underpinning features that should limit downside movement, he added.

 

A technical analyst said the next downside price objective for November soybeans is closing prices below solid support at the July low of US$8.34. The next upside price objective is pushing prices above solid technical resistance at US$8.69 1/2, which would fill on the upside a downside price gap on the daily bar chart.

 

First resistance for November soybeans is seen at Monday's high of US$8.52 3/4 and then at US$8.57 - the top of Monday's downside price gap on the daily chart. First support is seen at US$8.45 and then at US$8.40.

 

U.S. soybean crop ratings dropped two percentage points from the previous week to 56% good to excellent, on par with analysts' predictions of a 2 to 4 percentage-point decline.

 

Illinois crop conditions lost five percentage points, with 68% of the crop rated in good to excellent condition. Minnesota improved by 3 percentage points with 41% of its crop in good to excellent condition, and Missouri's crop ratings dropped six percentage points to 44% good to excellent.

 

Ninety-two percent of the crop was reported blooming, compared to 85% last week, 92% last year and 90% for the five-year average. Sixty-nine percent of the crop is setting pods, on par with last year at this time, but above the five-year average of 61%.

 

The DTN Meteorlogix Weather Service forecast said scattered showers may linger in southern areas of the western Midwest early Tuesday. Scattered showers and thundershowers redevelop through central and northern areas overnight into Wednesday, with dry conditions or an isolated thunderstorm in northern areas Thursday. Temperatures will average above normal with highs in the 80s and low to middle 90s Fahrenheit. Dry conditions or with only a few thundershowers in northern areas are on tap for Friday and Saturday. Temperatures will average above to much above normal, with highs ranging from the upper 80s to the upper 90s F during these days, Meteorlogix reports.

 

In the eastern Midwest, episodes of scattered showers and thunderstorms are seen for southern Wisconsin, southern Michigan, northern Illinois, northern Indiana and northern Ohio during Tuesday through Thursday. Temperatures will average near to above normal north, above to well above normal south. Highs of 95 to 100F are expected through southern areas during this period.

 

Dry conditions with only a few thundershowers in the north and east are on tap for Friday and Saturday. Temperatures will average above to much above normal in the west with highs in the middle to upper 90s F, above normal in the east, Meteorlogix forecasts.

 

August soybean deliveries totaled 2,084 lots. A customer account at Man Professional Clearing was the principle issuer of 895 lots, with stoppers scattered among various commission houses. The last trade date assigned was Aug. 6.

 

In overseas markets, crude palm oil futures in Malaysia's derivatives exchange ended lower after a volatile trading day Tuesday, with weakness in other related commodities such as soyoil and talk of strong August production putting the market under pressure, analysts said. The benchmark October contract on Bursa Malaysia Derivatives fluctuated wildly between positive and negative territory before ending at MYR2,478 a metric tonne, down MYR2 from Monday.

 

Soybean futures traded on the Dalian Commodity Exchange settled mostly lower Tuesday, tracking Monday's CBOT declines. The benchmark January 2008 soybean contract settled RMB16 lower at RMB3,419 a metric tonne.