September 11, 2007

 

CBOT Soy Outlook on Tuesday: Steady to down; pre-report position squaring

 

 

Chicago Board of Trade soybean futures are expected to start Tuesday's day session on slightly weaker footing, pressured by pre-crop report positioning.

 

CBOT soybean futures are called to start the session steady to 3 cents lower.

 

In overnight e-CBOT trading, September soybeans were 3 1/2 cents lower at US$9.00, and November soybeans were 3 cents lower at US$9.15.

 

A quiet news front coupled with mixed calls in the neighboring wheat pit is seen promoting a steady to weaker undertone, as traders reduce some risk ahead of Wednesday's U.S. Department of Agriculture crop report, analysts said.

 

The absence of underlying support from wheat is expected to attract some profit taking on recent gains, but with bullish technical momentum and the willingness of speculative funds to defend length in recent sessions is expected to limit selling pressure, analysts added.

 

A technical analyst said market bulls gained fresh upside technical momentum with Monday's price action. The next upside price objective for November soybeans is pushing and closing prices above strong resistance at the contract high of US$9.49 1/2. The next downside price objective is closing prices below psychological support at US$9.00.

 

First resistance for November soybeans is seen at Monday's high of US$9.19 and then at US$9.25. First support is seen at Monday's low of US$9.07 1/2 and then at US$9.00.

 

Monday afternoon, USDA reported that 56% of the U.S. soybean crop was in good-to-excellent condition, unchanged from the previous week. In Iowa, 72% of the crop was rated in good-to-excellent condition, down one percentage point from last week while in Illinois, 56% of the crop was rated in good-to-excellent condition, up one percentage point from the previous week.

 

Thirty-two percent of the soybean crop was dropping leaves compared to the five-year average of 25%. Illinois had 35% of its crop dropping leaves, above the five-year average of 19%, and Iowa had 25% of its crop dropping leaves.

 

USDA is scheduled to release its latest production, yield and supply and demand estimates Wednesday at 8:30 a.m. EDT. The average of analysts' estimates pegged 2007 soybean production at 2.650 billion bushels, up from the August figure of 2.625 billion. The average was from a range of 2.562 billion to 2.740 billion bushels. Ending stocks for 2006-07 were pegged at 561 million bushels from a range of 527 million to 578 million. The 2007-08 ending stocks were estimated at 217 million bushels from a range of estimates that span from 81 million to 322 million bushels.

 

The DTN Meteorlogix Weather Service forecast said colder temperatures and a chance for frost in the northern Midwest during a five-day period likely slows maturation of crops but significant damage is not expected. There are no significant harvest concerns at this time. In the Delta, recent rainfall may help improve the condition of any late filling crops.

 

September soybean deliveries totaled 1,539 lots. Customer accounts at Man Professional Clearing were the primary issuer and stopper of 905 and 824 lots respectively. The house account at Term Commodities stopped 278 lots. The last trade date assigned was Sept. 10.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday, supported by the surge in soyoil prices, analysts said. The benchmark May 2008 soybean contract settled RMB38 higher at RMB3,999 a metric tonne, after trading between RMB3,970/tonne and RMB4,023/tonne.

 

Meanwhile, China's soybean imports in August totaled 2.93 million metric tonnes, preliminary data provided by the General Administration of Customs showed Tuesday. Total soybean imports in January-August rose 1.8% on year to 19.81 million tonnes, it said, without giving the on-year change for August alone.

 

Crude palm oil futures on Malaysia's derivatives exchange ended steady Tuesday, sustained by high crude oil prices and firm soyoil on CBOT, market participants said. The benchmark November contract on the Bursa Malaysia Derivative Exchange ended unchanged at MYR2,500 a metric tonne after trading in a narrow range of MYR2,494/tonne and MYR2,516/tonne.