August 21, 2006

 

CBOT Soy Outlook on Monday: Steady-weak after softer overnight trade

 

 

Soy complex futures at the Chicago Board of Trade are expected to trade steady to slightly weaker on Monday, pressured by modest losses in overnight action and a lack of other fresh news.

 

Most-active November soybeans are called to open steady to 2 cents weaker. In e-cbot trade, November soybeans were slightly weaker, down 1/2 cent at US$5.60 a bushel. Soymeal fell 10 cents to US$162 a short tonne, while soyoil rose 5 points to 25.50 a pound.

 

Analysts noted volume was quiet in overnight trade and could be that way Monday, as information to give soybeans trading direction is light. "The trade is anxious that funds will keep selling," said Don Roose, president, U.S. Commodities.

 

Soybeans have fallen sharply recently to funds selling long positions as Midwestern weather has not hurt crop development.

 

In fact, more of the same is expected. DTN Meteorolgix weather firm said Midwestern weather is favoring soybean development. Rain chances will be mixed with warmer periods during the next 10 days. In the Delta, temperatures are expected to be not as hot and with some chance for a few thundershowers during this week. Stress to filling crops may be reduced somewhat but more rain is still needed, especially over Louisiana, Mississippi and Alabama.

 

November soybeans Friday hit some key bear levels, settling near the session low, the weekly low close and hitting a fresh 18-month low. A technical analyst said bears are still in full technical command and looking for more on the downside. The next downside price objective for the bears is US$5.50. Bulls need to drag soybeans above technical resistance at US$5.80 to reverse the trend. First resistance for November soybeans is seen at US$5.64 and then at US$5.70. First support is seen at US$5.59 1/2 and then at US$5.55.

 

There will be some news from the 2006 John Deere/Pro Farmer Midwest crop tour, an annual event since 1993. The tour will cover the eastern and western corn belt and count soybean pods.

 

In the eastern part of the tour, crop scouts will pay special attention to the maturity level of this year's soybean crop, as that factor could still greatly determine potential yields said tour director Chip Flory.

 

Expectations are for a relatively immature soybean crop in the east. On Monday the eastern leg will sample acreage in western Ohio/eastern Indiana.

 

In the west, crop scouts are expected to find soybean crops stressed by hot and dry weather. There has been little evidence of disease or insect problems, although in last 20 days ideal conditions exist for disease, he said. South Dakota will be the first day's tour. The USDA currently predicts a 2006 U.S. soybean crop of 2.928 billion bushels, representing a decline of 5.2% from last year. Yields are currently expected to decline by 8 bushels per acre in Iowa and Minnesota, fall 2 bushels in Illinois, and remaining steady with 2005 in both Ohio and Indiana.

 

Analysts said with crude oil prices up in overnight trade, soyoil prices could find support as speculators bid up soyoil on its use in biodiesel. Soyoil-soymeal trade should also dominate spreading action.

 

In other news, Rotterdam soymeal and soybean prices were generally weaker. European vegoils were also mostly weaker.