September 26, 2006

 

CBOT Soy Outlook on Tuesday: Up 2-4 cents; e-CBOT, tech buys, harvest pace

 

 

Soybean futures at the Chicago Board of Trade are seen starting Tuesday's day session on firmer footing, continuing the overnight theme on technical buying and concerns over slower than expected harvest activity.

 

In e-CBOT trade, November soybeans were 4 3/4 cents higher at US$5.49 3/4 per bushel. Soybean futures are called to open 2 to 4 cents higher.

 

The market is poised for some follow-through technical buying from Monday's bounce off session lows, and with Midwest weather more conducive to a slow harvest pace, futures should find some early price support, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Traders say drier conditions this week will help pick up harvest activity, but forecasted wetter weather next week could slow activity once again.

 

Nevertheless, the market knows harvest pressure is coming, and with ample old crop supplies, upside potential maybe limited, Roose added.

 

The DTN Meteorlogix weather forecast says harvest conditions should improve during the week, especially late in the week when it becomes warmer. Long-range charts suggest a return to wetter weather next week, especially in the west.

 

A technical analyst said first resistance for November soybeans is seen at US$5.47 1/2 - Monday's high - and then at US$5.50. First support is seen at US$5.40 and then at US$5.37 1/2.

 

In soymeal, the next downside price objective for the December future is closing prices below solid support at the contract low of US$158.50, the analyst said. For the market to regain fresh upside technical momentum, they will have to close prices above solid resistance at US$166.50, he adds. First resistance comes in at Monday's high of US$164.20 and then at US$166.50. First support is seen at Monday's low of US$161.80 and then at US$160.00.

 

U.S. Department of Agriculture on Monday reported 9% of the U.S. soybean crop has been harvested, a pace below last year and the five-year average of 17% and 12% respectively. Analysts anticipated the harvest pace would come in between 10% and 12% combined.

 

Seventy-percent of soybean crops were dropping leaves compared to 80% in 2005 and the five-year average of 69%. Eastern belt states lagged in this category while western belt state crops dropping leaves are above average. 62% of the U.S. soybean crop was rated in good-to-excellent condition as of Sept. 24, one percentage point higher than a week ago.

 

In demand news, USDA announced Tuesday private exporters reported the sale of 110,000 metric tonnes of U.S. soybeans to China for delivery in the 2006-07 marketing year.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Tuesday. Spot cash soybean bids were down 7 cents in Cedar Rapids, Iowa, down 10 cents in Frankfort, Ind., and down 3 cents in Peoria, Ill., according to cash sources Tuesday.

 

Rotterdam soybeans and soymeal were lower. European vegoils were mixed.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly moderately higher Tuesday, tracking gains on e-CBOT analysts said. The benchmark January 2007 contract settled RMB6 higher at RMB2,541 a metric tonne, after trading between RMB2,532/tonne and RMB2,544/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Tuesday as the market continued to follow the movement of crude oil futures, which were up overnight. The benchmark December contract ended at MYR1,521 a metric tonne, up MYR15 from Monday after moving between MYR1,511 and MYR1,527/tonne.