August 25, 2009
CBOT Soy Outlook on Tuesday: Tad lower; but demand, crop concerns underpin
Chicago Board of Trade soybean futures are expected to start Tuesday's day session a tad lower, stabilizing after Monday's sharp gains, but strong demand and crop uncertainties underpin.
CBOT soybean futures are seen opening mixed, with new crop futures opening 1 cent to 2 cents lower. September soybeans are seen 2 cents to 3 cents higher.
An unexpected improvement in weekly crop ratings is seen taking some edge off prices after strong gains in previous sessions, said Vic Lespinasse, analyst with Grainsanalyst.com.
The absence of clear direction in outside financial markets opens the door for mild consolidation to surface and temper upside movement.
However, cooler temperatures forecasted for the Midwest, strong Chinese demand, as well as dryness issues for China's crop and frost fears for U.S. crops will remain underpinning features for prices, Lespinasse said.
"After Monday's strong gains and only 1 to 2 cent declines overnight, the prospect of a significant setback does not look good, particularly with a fresh sale to China announced," he added.
Private exporters reported to the U.S. Department of Agriculture export sales of 110,000 metric tonnes of soybeans for delivery to China during the 2009/2010 marketing year, the USDA said Tuesday.
The DTN Meteorlogix weather forecast said a much cooler outlook for the U.S. Midwest this weekend would not mean a frost as it is too early for that, but it would mean slower development of crops.
Dry conditions with a few widely scattered showers and thundershowers are expected through central or western areas of the Midwest Thursday. Widely scattered showers and thundershowers are forecast west and south, with mostly dry conditions elsewhere Friday and Saturday. Temperatures are seen near to below normal Thursday and Friday, and near normal Saturday, Meteorlogix said in the forecast.
A technical analyst said first resistance for November soybeans is seen at Monday's high of UA$10.08 3/4 and then at UA$10.20. First support is seen at UA$10.00 and then at UA$9.90.
USDA said 69% of the soybean crop was rated good to excellent, up from 66% the prior week. Traders were expecting ratings to stay steady or decline.
The USDA said 85% of the crop was in the pod setting stage, up from 72% last week but down from the average of 92%. Illinois remains well behind, with only 72% of the crop in the setting stage, up from 58% last week but down from the average of 94%. Indiana is not as far behind, and Iowa is almost right on schedule.
The USDA said 97% of the crop was in the blooming stage, up from 93% last week and down from the average of 99%.
Meanwhile, Kim Rugel, analyst with Benson Quinn Commodities, noted in a report that the USDA did not list any progress in terms of dropping leaves. This is one or two weeks later than normal, as 6% of the crop was already dropping leaves at the same time in 2007.
In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled only a tad higher Tuesday, despite a rally in CBOT counterparts overnight, due to losses in Chinese equities. The benchmark May 2010 soybean contract settled RMB10 a metric tonne higher at RMB3,721/tonne, or up 0.3%.
