September 5, 2006

 

CBOT Soy Outlook on Tuesday: Steady-down 2 cents; crop outlooks weigh

 

 

Chicago Board of Trade soybean futures are seen starting Tuesday's day session with a steady to easier feel, as bearish crop outlooks and non-threatening weather continues to weigh on prices.

 

Soybeans are called to open steady to 2 cents lower.

 

In e-CBOT trade, November soybeans were 1 cent lower at US$5.50 1/2 per bushel.

 

The dominant influence on soybeans remain growing production and yield estimates, as favorable crop conditions continue to promote larger crop outlooks, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The market is poised to stay on the defensive ahead of the upcoming harvest, but mild support may be generated from spillover support from expected strength in the neighboring corn and wheat markets, traders said.

 

However, with early harvesting expected to pick up in central Iowa next week and increased moisture reported in double crop areas of the state, upside potential remains limited, Roose added.

 

A technical analyst said bearish momentum still has firm technical control of the market. The next downside price objective for November soybeans is closing prices below solid technical support at US$5.50. It will take a close above technical resistance at US$5.70 basis November to begin to provide some fresh upside technical momentum.

 

First resistance for November soybeans is seen at US$5.57 - Friday's high -and then at US$5.60. First support is seen at US$5.50 and then at US$5.45.

 

The DTN Meteorlogix forecast said there is a chance for sprinkles or light showers through central and east areas of the U.S. Midwest on Tuesday. Mainly dry conditions are on tap for Wednesday, with dry conditions or a few very light showers expected Thursday. Temperatures will average near to above normal in the western belt and below normal in the eastern belt Tuesday, with near to above normal readings expected Wednesday and Thursday, according to Meteorlogix.

 

On tap for Tuesday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 10 a.m. CDT. USDA will also release its weekly crop progress report 3 p.m. CDT. Analysts anticipate soybean crops rated in good to excellent conditions to improve by 1 percentage point.

 

In deliveries, a total of 2,190 delivery notices were posted against the September soybean future. The house account at Bunge Chicago was the principal issuer of 603 lots. The last trade date assigned was Sept. 1. Seven delivery notices were posted against the September soymeal contract. A customer account at Tenco stopped all seven lots. The last trade date assigned was July 31. Some 854 delivery notices recirculated against September soyoil. The last date trade assigned was Sept. 1.

 

Commodity Futures Trading Commission on Friday reported large speculative traders were net short 45,247 combined soybean futures and options contracts as of Aug. 29, compared to net shorts of 46,139 in the previous week. Speculative funds were reported net long soyoil future and options to tune of 22,040 lots, down from 37,101 lots in the prior week. Large speculative traders were reported net short combined futures and options positions in soymeal by 43,553 lots compared to 43,246 contracts last week.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Tuesday. Spot cash soybean bids were down 10 cents in Sioux City, Iowa, down 3 cents in Peoria Ill., and down 1 cent in St. Louis, according to cash sources Tuesday.

 

Meanwhile, late Friday, FC Stone released crop estimates ahead of the Sept. 12 crop report. The firm pegged soybean production at 3.166 billion bushels based on a yield of 42.8 bushels an acre.

 

Rotterdam soybeans were flat and soymeal was mixed. European vegoils were flat to lower.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Tuesday on a recovery in demand, analysts said. The most active January 2007 contract settled RMB3 higher at RMB2,548 a metric tonne, after trading between RMB2,539 and RMB2,554/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Tuesday as the market remained on a downtrend amid pressure from weaker crude oil prices and a strengthening Malaysian ringgit. The benchmark November CPO contract ended at MYR1,563 a metric tonne, down MYR9.