September 6, 2006

 

CBOT Soy Outlook on Wednesday: Seen up 1-3 cents; in tune with e-CBOT

 

 

Soybean futures are seen starting Wednesday's day session firmer, based on higher overnight indicators and outlooks for light trade consolidation heading toward next week's crop reports.

 

Soybeans are called to open 1 to 3 cents higher.

 

In e-CBOT trade, November soybeans were 3 cents higher at US$5.57 1/4 per bushel.

 

The market is poised to extend Tuesday's mild correction, with ideas the market has a decent handle on potential crop production coupled with oversold conditions which is seen underpinning prices, analysts said

 

However, upside movement is expected to meet solid overhead resistance as optimism toward yield potential along with bearish domestic and world supplies is expected to keep a lid on upside enthusiasm, traders added. A market technician said bearish momentum still has 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 to begin to provide some fresh upside technical momentum.

 

First resistance for November soybeans is seen at US$5.60 and then at US$5.63--Tuesday's high. First support is seen at US$5.50 and then at US$5.45.

 

Meanwhile, Informa Economics released crop estimates ahead of the September 12 crop report. The firm pegged U.S. soybean production at 3.108 billion bushels based on a yield of 42.0 bushels an acre.

 

U.S. Department of Agriculture on Tuesday reported 59% of U.S. soybeans were rated in good- to-excellent condition, unchanged from the previous week. There were no significant changes in crop conditions, with top-producing soybean states of Illinois seeing their crop conditions rise by 4 percentage points to 74% good to excellent. Iowa soybean conditions were up 2 percentage points at 71% in the top category. USDA reported 13% of soybean crops were dropping leaves compared to 13% in 2005 and the five-year average of 12%. Most states were holding near to above average in this category.

 

The ratings were a non-event, falling in line with expectations, as higher ratings in key producing states were anticipated following recent favorable weather conditions in the Midwest, analysts said.

 

The DTN Meteorlogix forecast said drier and warmer weather during the next few days in the Midwest will favor filling to maturing crops in the western belt, following the weekend rains. There is some chance for rain redeveloping during the upcoming weekend.

 

In deliveries, a total of 2,224 delivery notices were posted against the September soybean future. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was Sept. 5. 616 delivery notices recirculated against September soyoil. The last date trade assigned was Sept. 5.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Wednesday. Spot cash soybean bids were up 10 cents in Sioux City, IA, up 5 cents in Quincy Ill., and up 7 cents in St. Louis MO, according to cash sources Wednesday.

 

Rotterdam soybeans and soymeal were mostly higher. European vegoils were flat to lower.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Wednesday, in line with overnight gains on the Chicago Board of Trade, analysts said. The most active January 2007 contract settled RMB17 higher at RMB2,565 a metric tonne, after trading between RMB2,550 and RMB2,575/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended mixed Wednesday after a choppy trading day, with participants mostly remaining cautious until the release of key supply and demand data in the coming week. The benchmark November CPO contract ended at MYR1,562 a metric tonne, down MYR1 from Tuesday.