August 9, 2006

 

CBOT Soy Outlook on Wednesday: Steady-up; consolidating recent losses

 

 

CBOT soybean futures are expected to start Wednesday's day session activity steady to firm, in tune with overnight trade, as the market consolidates recent losses.

 

Soybeans are called to open steady to up 2 cents.

 

In e-CBOT trade, November soybeans were 1-cent higher at US$5.77 1/4 per bushel.

 

The market is seen stabilizing after a series of losses, and with declines becoming marginalized by oversold conditions, mild consolidation ahead of Friday's crop reports may be on tap for futures, analysts said.

 

The Relative Strength Index for November soybeans stood at 26.58 on Wednesday's close. A RSI reading below 30.00 is considered oversold market conditions.

 

However, the absence of any bullish fundamentals to attract aggressive buying is seen limiting upside momentum, with the market's recent penetration of underlying technical support expected to keep buyers on the run, analysts added.

 

Market technicians said serious near-term chart damage has been inflicted this week. The next downside price objective for November futures is solid technical support at the US$5.70 level. It will take a close above technical resistance at US$5.94 - meaning filling this week's big downside price gap on the daily bar chart - to provide fresh upside technical momentum.

 

First resistance for November soybeans is seen at US$5.82 3/4 - Tuesday's high - and then at US$5.86 1/2 - this week's high. First support is seen at US$5.73 1/2 - Tuesday's low - and then at US$5.70.

 

The DTN Meteorlogix forecast said scattered to widely scattered thundershower activity in the western Midwest 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 eastern Midwest, any scattered or widely scattered thundershower activity in western Illinois will help to ease stress to filling corn and soybeans but more rain will still be needed. Generally favorable growing conditions are on tap elsewhere, Meteorlogix said.

 

Meanwhile, the average of trade estimates pegs 2006 soybean production at 3.020 billion bushels form a range of estimates than span from 2.909 billion to 3.105 billion. The average of yield estimates was 40.8 bushels per acre from arrange of 39.3 to 42.0 bushels per acre. U.S. Department of Agriculture is scheduled to release its August crop report Friday 7:30 a.m. CDT.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Wednesday. Spot cash soybean bids were down 6-cent in Bloomingtonne, Ill., up 2 cents in Evansville, Ind., and down 1-cent in St. Louis, Mo., according to cash sources Wednesday.

 

In deliveries, a total of 1,294 delivery notices recirculated against the August soybean future. The last trade date assigned was Aug. 8. 171 delivery notices recirculated against the August soymeal contract. The house account at Bunge Chicago stopped 145 lots. The trade date assigned was Aug. 7. One hundred and six delivery notices were posted against August soyoil. The last trade date assigned was Aug. 3.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly higher Wednesday on an upward correction. The benchmark September contract settled RMB3 higher at RMB2,393 a metric tonne, after trading between RMB2,382 and RMB2,400/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Wednesday for a third straight day. The benchmark October contract ended at MYR1,677/tonne, up MYR18 from Tuesday.