September 15, 2009

 

CBOT Soy Outlook on Tuesday: Up 2-4 cents; cold forecasts, carryover buying

 

 

Soybean futures on the Chicago Board of Trade are poised for a higher start to Tuesday's day session, supported by frost threats and carryover momentum from Monday's late gains.

 

CBOT soybean futures are seen opening 2 to 4 cents higher.

 

Private weather forecasts projecting an early frost threat from late next week in northwest and northern Midwest growing areas are enticing traders to add some risk premium into prices, analysts said.

 

The U.S. soybean crop remains vulnerable to yield losses in the event of a freeze before October, as maturity levels are half of where they should be at this time of the year, said Victor Lespinasse, analyst with Grainanalyst.com.

 

U.S. Department of Agriculture said Monday only 17% of the crop was dropping leaves as of Sunday, up from 7% the prior week, but down from 20% last year and the five-year average of 36%. Only 3% of the crop in Illinois was dropping leaves, compared to the average of 33%, and Indiana was at 15% compared to the average of 45%. Iowa was also well behind schedule, with 18% dropping leaves compared to the five-year average of 36%.

 

Sixty-eight percent of the soybean crop was rated good-to-excellent, unchanged from the prior week. Traders were expecting ratings to hold steady or drop slightly.

 

Mixed signals from outside markets are keeping attention on weather, with the ability of the market to bounce in late Monday action showing some stability after an over US$1.00 a bushel slide in recent weeks.

 

A market technician said first resistance for November soybeans is seen at US$9.20 and then at US$9.25. First support is seen at US$9.00 and then at Monday's low of US$8.92.

 

Solid export demand is another underpinning feature for prices, but near term weather remains favorable for developing crops and with cold weather still 10 days away, upside potential maybe limited, analysts said.

 

The DTN Meteorlogix weather forecast said crops in the Midwest region will continue to benefit from near to above normal temperatures for at least the next 7 days. However, long range charts are looking colder today. This means below normal temperatures by the middle to late part of next week. Unfavorable for late maturing crops, if it develops as expected, Meteorlogix said.

 

In overseas markets, soybean futures rebounded on the Dalian Commodity Exchange Tuesday, tracking small gains on CBOT. With oil prices and a weaker dollar showing signs of stabilizing, the benchmark May 2010 soybean contract rose 0.6% to settle at RMB3,583 a metric tonne.

 

Meanwhile, China is expected to import 1.8 million metric tonnes of soybean in October, the lowest since February 2007 and sharply lower than the 2.8 million tonnes projected for September, according to estimates provided Tuesday by the China National Grain and Oils Information Center.

 

Crude palm oil futures on Malaysia's derivatives exchange rebounded Tuesday, as speculative buying interest helped offset part of the losses of the previous trading session. The benchmark November CPO contract on the Bursa Malaysia Derivatives ended MYR30 higher at MYR2,100 a metric tonne.