August 8, 2006

 

CBOT Soy Outlook on Tuesday: Down 2-4 cents on follow through selling

 

 

Soybean futures on the Chicago Board of Trade are seen starting Tuesday's day session on the defensive, on follow through price weakness from Monday and overnight.

 

Soybeans are called to open 2 to 4 cents lower.

 

In e-CBOT trade, November soybeans were 4 cents lower at US$5.78 per bushel.

 

The market is poised to drift lower again, as technical weakness and favorable weather conditions encouraging yield potential is keeping a lid on upside movement, analysts said.

 

The absence of supportive features continues to feed into the hands of market bears, with rains moving through the western Midwest and mild temperatures providing better chances for the 2006 crop to exceed trend line yields, said a CBOT floor analyst.

 

Technical analysts said there was a very strong technical support zone located between US$5.85 and US$5.92 basis November, and prices blew right below that zone Monday. The market has gained good downside technical momentum, with the next downside price objective for solid technical support at the November 2005 low of US$5.75 1/2. It will take a close above technical resistance at US$6.00 to provide fresh upside technical momentum, analysts said.

 

First resistance for November soybeans is seen at US$5.86 1/2 - Monday's high - and then at US$5.91. First support is seen at US$5.80 1/2 - Monday's low - and then at US$5.75 1/2.

 

The DTN Meteorlogix forecast said scattered to widely scattered thundershower activity will help to ease stress to filling corn and soybeans during the 5-7 day period but more rain will still be needed in the western Midwest. Temperatures will average near to below normal Tuesday, near to above normal Wednesday and Thursday, Meteorlogix reports.

 

In the eastern Midwest, any scattered or widely scattered thundershower activity in Illinois will help to ease stress to filling corn and soybeans but more rain will still be needed, Meteorlogix reports. Temperatures will average below normal in the northern reaches of the region, above normal in southern areas Tuesday, and near to above normal Wednesday and Thursday, Meteorlogix forecasts.

 

Meanwhile, Taiwan Sugar Corp. is seeking 46,000 metric tonnes of U.S.-origin corn and 24,000 tonnes of U.S.-origin soybeans for late August through October delivery in a tender Friday, a trader in Taipei said Tuesday.

 

Soybean crop ratings held steady 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 Aug. 6. Minnesota crops rated as good-to-excellent improved by 11 percentage points in their top-rated category, Iowa soybeans jumped 4 percentage points to 59%. Illinois soybeans increased 1 percentage point to 68% good-to-excellent, Indiana crops were unchanged at 66% in the same category, while Ohio crop conditions improved 5 percentage points to 67% good-to-excellent. Meanwhile, Missouri soybean crop ratings plunged 13 percentage points in their top rated categories.

 

Ninety three percent of soybeans are blooming, the USDA reported, up 6 percentage points from the week prior. Seventy two percent of the U.S. soybean crop is setting pods, up 19 percentage points from last week and 9 percentage points ahead of the five-year average, according to the report.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Tuesday. Spot cash soybean bids were down 9-cent in Cedar Rapids Iowa, up 2 cents in central Illinois, and down 1-cent in St. Louis, Mo., according to cash sources Tuesday.

 

In deliveries, a total of 1,343 delivery notices recirculated against the August soybean future. The last trade date assigned was Aug. 7. 524 delivery notices recirculated against the August soymeal contract. The house account at Bunge Chicago stopped 390 lots. The trade date assigned was Aug. 7. Seventy five delivery notices were posted against August soyoil. The last trade date assigned was Aug. 3.

 

Rotterdam soybeans and soymeal prices were lower. European vegoils were mixed.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Tuesday, in step with overnight losses in Chicago Board of Trade soybeans. The benchmark September contract settled RMB18 lower at RMB2,390/tonne, after trading between RMB2,382/tonne and RMB2,398/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply higher Tuesday, boosted by renewed optimism about biodiesel after a rally in crude oil prices. The benchmark October contract ended at MYR1,659 a metric tonne, up MYR41 from Monday after moving between MYR1,615 and MYR1,660/tonne.