August 29, 2006

 

CBOT Soy Outlook on Tuesday: Steady-firmer following overnight

 

 

Soy complex futures at the Chicago Board of Trade are expected to trade steady to firmer on Tuesday, supported by modest overnight gains and some ideas losses on Monday were overdone.

 

Farmer selling is also very light, which could limit losses.

 

Most-active November soybeans are called to open steady to 1 cent firmer.

 

In e-cbot trade, November soybeans finished the overnight session 1 cent higher at US$5.53 a bushel. Soymeal was up 30 cents at US$162 a short tonne while soyoil fell 3 points to 25.14 a pound.

 

On Monday soybeans hit multi-month lows and some analysts said the market could rebound in early dealings, but beyond that market direction is a toss-up. A lack of fresh news could limit activity, while few farmer sales could also limit the downside.

 

"When we hit this multi-month lows in the new-crop soybeans, the farmer movement is non-existent" and that keeps soybeans from really breaking below the current levels, said Don Roose, president, U.S. Commodities.

 

The U.S. Department of Agriculture said late Monday 59% of the U.S. soybean crop was in good-to-excellent condition, up one percentage point from a week ago and in line with analysts' expectations of a one-to-two percentage-point increase as moisture aids development. The USDA reported 7% of the crop is dropping leaves, compared to 4% last week and the five-year average of 5%.

 

Roose said while the moisture is good for the developing soybean crop, "we really can use some warmer days. This cooler weather isn't good for soybeans."

 

DTN Meteorologix said Midwestern rainfall is maintaining adequate soil moisture for filling crops. This wet weather may be unfavorable for any maturing crops or early harvests, especially in the south and east. In the Delta, showers help to improve the condition of any late filling crops but may be unfavorable for maturing crops.

 

A technical analyst said bears still have the solid technical advantage, amid a lack of fresh bullish fundamental news. The next downside price objective for the bears is a close below US$5.50. It will take a close above technical resistance at US$5.70 to begin to provide the bulls with some fresh upside technical momentum. First resistance for November soybeans is seen at US$5.56 3/4 and then at US$5.60. First support is seen at US$5.51 and then at US$5.50.

 

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

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower as the market gave back gains made earlier. The benchmark November contract ended at MYR1,557 a metric tonne, down MYR18.

 

Soybean futures traded on China's Dalian Commodity Exchange settled lower as prices of imported soybeans dropped.The most active January 2007 contract settled RMB12 lower at RMB2,524 a metric tonne.

 

India's government may not consider raising base import prices of edible oils if there is a large increase in international prices, a senior government official said Tuesday.