September 18, 2007

 

CBOT Soy Outlook on Tuesday: Seen up 4-6 cents on follow through momentum

 

 

Chicago Board of Trade soybean futures are expected to start Tuesday's day session on firm footing once again, taking its cue from overnight trade, with carryover momentum from Monday a featured attraction.

 

CBOT soybean futures are called to start the session 4 to 6 cents higher.

 

In overnight e-CBOT trading, November soybeans were 5 1/4 cents higher at US$9.73 3/4, and January soybeans were 6 cents higher at US$9.89 1/2.

 

Bullish underlying sentiment, with concerns surrounding tightening stocks, strong demand and the need to attract increased global acreage remains the fundamental catalyst to keep sellers on the run, analysts said.

 

Technical momentum is expected to keep speculative buyers enthused with spillover strength from neighboring commodity markets and outlooks for a Fed rate cute adding incentives for fund buyers, analysts added.

 

Meanwhile, lingering concerns over potential yield losses from a weekend frost is aiding the underlying theme. "Normally, the minimal damage expected from the frost would not provide much incentive to buyers, but with inventories expected to tighten sharply during the 2007-08 marketing year any drop in supply is magnified," a CBOT floor analyst said.

 

A technical analyst said market bulls keep getting a steady dose of bullish fundamental news to keep them going. Prices are still in a steep uptrend from the August low, with no strong signs of a market top being in place. The next upside price objective for November soybeans is to push and close prices above major psychological resistance at US$10.00 a bushel. The next downside price objective is closing prices below support at US$9.49 1/2.

 

First resistance for November soybeans is seen at Monday's contract high of US$9.74 1/2 and then at US$9.85. First support is seen at US$9.60 and then at US$9.49 1/2.

 

U.S. Department of Agriculture reported 56% of the U.S. soybean crop was in good-to-excellent condition, matching the agency's rating from a week ago but down from 61% last year. In Illinois, 55% of the crop was rated good to excellent, down one percentage point from a week ago. Indiana had 44% of its crop in good-to-excellent condition, up two percentage points from last week. In Iowa, 74% of the crop was in good-to-excellent condition, up two percentage points from last week.

 

The USDA said 55% of the crop was dropping leaves, up from 32% last week and 45% in 2006. The five-year average is 47%. Illinois had 59% of its crop dropping leaves, above the five-year average of 41%, and Iowa had 54% of its crop dropping leaves, slightly above the five-year average of 53%. In Indiana, 64% of the crop was dropping leaves, up from the five-year average of 50%, according to the USDA.

 

The DTN Meteorlogix Weather Service forecast said scattered showers and thunderstorms in the western U.S. Midwest Tuesday will disrupt some harvest activity. However, overall conditions for maturing and harvesting soybeans will be favorable during the next 6-10 days. In the Delta, Dry weather and above normal temperatures during the next seven days will favor crop maturation and the harvest, Meteorlogix reports.

 

In other news, India's central province of Madhya Pradesh forecasts its soybean output will total 5.61 million metric tonnes in 2007, up 17.36% on year, due to record high soybean acreage.

 

India has kept unchanged the base price of imported edible oils, a federal government's notification said late Monday. The base price of imported crude palm oil has been kept at US$447 a metric tonne and that of crude soyoil at US$580/tonne.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher for the second straight session Tuesday due to continuous inflows of speculative money and on the back of Monday's gains in CBOT soybean futures. The benchmark May 2008 soybean contract settled RMB29 higher at RMB4,154 a metric tonne, after trading between RMB4,130/tonne and RMB4,176/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher Tuesday, driven mainly by gains in soyoil and crude oil, market participants said. The benchmark December contract on the Bursa Malaysia Derivative Exchange ended MYR19 higher at MYR2,609/tonne.