August 15, 2006

 

CBOT Soy Outlook on Tuesday: Steady, firm; looking for stability

 

 

Soybean futures on the Chicago Board of Trade are seen starting Tuesday's day session steady to firmer, attempting to find stability following the market's recent technical price break.

 

Soybeans are called to open steady to 2 cents higher.

 

In e-CBOT trade, November soybeans were 1/2-cent higher at US$5.69 3/4 per bushel.

 

The market is trying move higher, with the heavy buildup of market shorts at the low end of the recent price scale and slow producer movement combining to generate light buying interest, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Monday's late session reversal raised thoughts that speculative fund selling was exhausted and with bearish fundamental inputs adequately factored into prices, futures are overdue for a price bounce, traders said.

 

Nevertheless, weather conditions remain favorable for late season crop development, crop ratings are up and ample nearby supplies combine to present a bearish case that should limit upside movement, said a CBOT commission house broker.

 

A technical analyst said serious near-term chart damage has been inflicted recently, with the next downside price objective solid technical support at US$5.50. It will take a close above technical resistance at US$5.94 - meaning filling last 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$5.75 1/2 - and then at US$5.80. First support is seen at US$5.64 - Monday's low - and then at US$5.60.

 

The DTN Meteorlogix forecast said the U.S. and European models are in fair to good agreement. Weak upper level troughs over or near the Midwest will lead to showers across the crop belt during the next 5-7 days. The Midwest may be cooler and drier during days 8-10 when a ridge shifts westward, Meteorlogix forecasts.

 

Soybean crop ratings improved as expected in the good-to-excellent category. The U.S. Department of Agriculture reported that 56% of the U.S. soybean crop was in good-to-excellent shape as of Aug. 13. Iowa soybeans jumped 11 percentage points to 70%, Indiana crops improved to 71% in the same category, while Ohio crop conditions improved 2 percentage points to 69% good-to-excellent. Illinois soybeans decreased 1 percentage point to 67% good-to-excellent, while Minnesota crops rated as good-to-excellent declined by 6 percentage points in their top-rated category.

 

Eighty-five percent of the U.S. soybean crop is setting pods, up 13 percentage points from last week and 8 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 2 cents in Des Moines Iowa, up 2 cents in central Illinois, and up 3 cents in St. Louis, Mo., according to cash sources Tuesday.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Tuesday on an upward correction, said an analyst. The most active January 2007 contract settled RMB2 higher at RMB2,522 a metric tonne, after trading between RMB2,512 and RMB2,530/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly lower Tuesday after a choppy trading day as market sentiment turned cautious after recent strong gains. The benchmark October contract ended at MYR1,642 a metric tonne, down MYR5 from Monday.