September 19, 2006

 

CBOT Soy Outlook on Tuesday: Up 1-2 cents; following e-CBOT theme

 

 

Soybean futures on the Chicago Board of Trade are expected to start Tuesday's day session modestly firmer, following the overnight theme as the market continues to correct from prior losses.

 

In e-CBOT trade, November soybeans were 1 1/4-cent higher at US$5.54 1/4 per bushel. Soybean futures are called to open 1 to 2 cents higher.

 

Follow through technical buying from Monday coupled with concerns over frost slowing the crops maturation process with on and off Midwest rains delaying some harvest activity is expected to extend the current price bounce, analysts said.

 

The weather conditions and technical activity is keeping sellers at bay, with scattered talk of fresh export demand adding support. However, bearish underlying fundamentals remain a limiting factor to upside movement as supply side weakness is expected to attract hedge pressure on any prolong upward moves, traders added.

 

A technical analyst said seasonality studies show soybean prices bottoming out in the October timeframe and then working higher into the end of the year. It will take a close above technical resistance at the September high of US$5.63 basis the November contract to begin to provide some fresh upside technical momentum. The next major downside price objective for November soybeans is solid support at last week's low of US$5.37 1/2.

 

First resistance for November soybeans is seen at US$5.58 - Monday's high - and then at US$5.63. First support is seen at US$5.51 - Monday's low - and then at US$5.47 1/2.

 

The DTN Meteorlogix weather forecast says frost and light freeze conditions over the northern part of the western corn belt is not expected to be damaging but may slow maturation of crops. Wet weather may slow any early harvest activities. Mainly dry conditions are on tap for the Midwest Tuesday and Wednesday. However, rain and thunderstorms return to the western belt Thursday.

 

Temperatures will average below or well below normal during a three day period, Meteorlogix forecasts. The lowest temperatures will likely range from 29-35 Fahrenheit through eastern South Dakota, southern Minnesota, northern Iowa and southern Wisconsin. Frost and light freeze conditions are possible in these areas. Lows may fall into the middle 30s F in central Iowa, northern Illinois, Michigan, northern Indiana and northwest Ohio, Meteorlogix reports.

 

U.S. Department of Agriculture on Monday reported 61% of U.S. soybeans were rated in good-to-excellent condition, up 1 percentage point from the previous week. USDA said 48% of soybean crops were dropping leaves compared to 60% in 2005 and the five-year average of 49%. Eastern belt states lagged in this category, with Illinois crops dropping leaves reported at 32% compared to its five-year average of 49%, and 34% of Indiana soybeans are dropping leaves compared to its five-year average of 58%. In contrast, western belt states crops dropping leaves are above average. Iowa soybean crops dropping leaves are reported at 56% compared to its average of 49% and Minnesota is reported at 67% versus its five-year average of 51%.

 

Six percent of the U.S. soybean crop has been harvested, a pace just below the five-year average of 5%.

 

In demand news, Taiwan's Breakfast Soybean Procurement Association, or BSPA, bought 60,000 metric tonnes of U.S-origin soybeans from trading house Cargill in a tender concluded Tuesday, an association official said. South Korea's Korea Feed Association, or KFA, bought 117,500 metric tonnes of soymeal in a tender Tuesday, an official with the association said. The purchase included 52,500 tonnes of U.S. soymeal and 65,000 tonnes of soymeal from India.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Tuesday as an oversupply worsened with the early harvest continuing to enter the market, analysts said. The January 2007 contract settled RMB7 lower at RMB2,557 a metric tonne, after trading between RMB2,552 and RMB2,567/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly higher Tuesday, boosted by late speculative buying amid talk of better-than-expected September exports. The December contract ended at MYR1,562 a metric tonne, up MYR12 after trading between MYR1,547 and MYR1,563/tonne.