August 28, 2007
CBOT Soy Outlook on Tuesday: Up 3-4 cents; technical momentum, crop concerns
Soybean futures on the Chicago Board of Trade are expected to start Tuesday's session higher, feeding off carryover momentum from Monday's firm technical close and lingering concerns for crops in the southern soybean belt.
CBOT soybean futures are called to start the session 3 to 4 cents higher.
In overnight e-CBOT trading, September soybeans were 3 1/2 cents higher at US$8.60, and November soybeans were 4 1/2 cents higher at US$8.77 1/4.
The market is poised to extend its current uptrend, buoyed by strong underlying technical support, with prices closing above major moving averages Tuesday, analysts said.
Lingering worries over crops facing stress in the southern Midwest and Delta as well as solid demand are expected to underpin prices as well, analysts added.
However, an unexpected small improvement in weekly crop ratings are seen taking some of the steam out the bullish charge, a floor trader said. Reports of improved crop conditions in parts of the soybean belt following recent rains should limit upside potential, he added.
Meanwhile, spillover support from expected price strength in wheat futures is seen lending strength to prices, analysts added.
A technical analyst said market bulls have good upside technical momentum. The next upside price objective for November soybeans is pushing prices above solid technical resistance at the August high of US$8.88. The next downside price objective is closing prices below solid support at US$8.50.
First resistance for November soybeans is seen at Monday's high of US$8.73 1/2 and then at US$8.78. First support is seen at US$8.67 and then at US$8.59.
U.S. Department of Agriculture rated 55% of the soybean crop in good-to-excellent condition, up from 54% a week ago, but below last year's rating of 59%. Overall, 96% of the U.S. soybean crop was setting pods, up from the average of 94%, and 6% was dropping leaves, up from the average of 5%.
In Illinois, 53% of the crop was in good-to-excellent condition, down from 58% a week earlier. Ninety-eight percent of the crop was setting pods, above the average of 95%, and 5% was dropping leaves, above the average of 2%, the USDA said. In Iowa, 75% of the crop was in good-to-excellent condition, down from 76% a week earlier. Ninety-nine percent of the crop was setting pods, on par with the five-year average, while 1% of the crop was dropping leaves, the USDA said.
In Minnesota, 54% of the crop was rated in good to excellent condition, up 11 percentage points from the previous week, all the states' soybean crops were setting pods, and 2% of the crop was dropping leaves.
The DTN Meteorlogix Weather Service forecast said scattered thunderstorms are on tap for the U.S. western Midwest Tuesday, with drier conditions seen for Wednesday and fair conditions seen for Thursday. Temperatures will average near to above normal Tuesday, near normal Wednesday and Thursday. Mainly dry conditions are expected Friday and Saturday. A few light showers are seen for Sunday, with temperatures averaging near to above normal Friday, and above normal Saturday and Sunday, Meteorlogix forecasts.
In the eastern Midwest, mainly dry conditions are on tap for Tuesday. A chance for a few light showers with isolated heavier storms are forecast for Wednesday. Mainly dry conditions are expected Thursday, with temperatures averaging above normal Tuesday and Wednesday, and near to above normal Thursday, Meteorlogix forecasts.
In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday, tracking Monday's gain in CBOT soybeans. The benchmark May 2008 soybean contract settled RMB28 higher at RMB3,676 a metric tonne.
Crude palm oil futures on Malaysia's derivatives exchange ended lower Tuesday amid low volumes as traders sought fresh cues while fundamentals remained weak, trade participants said. The benchmark November contract on the Bursa Malaysia Derivative Exchange ended at MYR2,412/tonne, down MYR9 from the previous close.
