September 29, 2009

 

CBOT Soy Outlook on Tuesday: Up 1-2 cents; positioning ahead of USDA report

 

 

Chicago Board of Trade soybean futures are expected to start Tuesday's day session with modest gains, supported by pre-crop report positioning and lingering frost fears.

 

CBOT soybean futures are seen starting 1 to 2 cents higher. In overnight action, Nov soybeans were 3/4 cent higher at US$9.20 1/4.

 

Light short-covering in front of Wednesday's quarterly grains stocks report, coupled with mild concerns surrounding cold temperatures creeping into the upper Midwest are seen underpinning prices, analysts said.

 

"You can nip a few bushels off of beans if [frost] would come far enough south," said Dale Durchholz, analyst with Agrivisor in Bloomington, Ill. "But it would probably have to get down into northern Illinois to say you're going to impact the total production this year," he added.

 

Another choppy, two-sided session is anticipated, with traders leery of rallying prices heading into the fall harvest of a record forecasted 2009 U.S. soybean crop. However, strong underlying demand remains an underpinning feature for prices.

 

A market technician said the next upside technical objective for market bulls is pushing and closing November prices above solid technical resistance at US$9.77 3/4 a bushel. The next downside price objective is pushing and closing prices below solid technical support at the September low of US$8.92 a bushel.

 

First resistance for November soybeans is seen at US$9.30 and then at Monday's high of US$9.37 1/4. First support is seen at Monday's low of US$9.12 3/4 and then at last week's low of US$9.02.

 

The DTN Meteorlogix weather forecast said frost is possible this morning in parts of Nebraska, South and North Dakota and Minnesota. A little frost is possible tonight or Wednesday night in parts of the north and northeast Midwest. Rain and storms look to hit Iowa and Minnesota the hardest Thursday.

 

In the Delta, the region should be drier until a cold front moves in later in the week. Conditions should slowly improve after recent heavy rains for the maturing crops and crop harvests, Meteorlogix said.

 

The soybean harvest was 5% complete as of Sunday, compared to 8% last year and the average of 18%, U.S. Department of Agriculture said Monday. In Iowa, 6% of the crop was harvested, compared to 7% last year and the average of 20%, the USDA said. Illinois was 1% finished with harvest, compared to 5% last year and the average of 21%. The Mississippi harvest was 30% complete compared to the five-year average of 71%.

 

The USDA said 63% of soybeans were dropping leaves, compared to 65% last year and the average of 77%. In Illinois, 41% of soybeans were dropping leaves, down from 52% last year and the average of 77%. In Iowa, 76% of the crop was dropping leaves, compared to the average of 84%.

 

USDA is scheduled to release its quarterly grain stocks report Wednesday 8:30 a.m. EDT (1230 GMT).

 

In overseas markets, soybean futures drifted lower on the Dalian Commodity Exchange Tuesday as investors continued to liquidate positions in preparation for China's eight-day national holiday. The benchmark May 2010 contract settled 0.3% lower at RMB3,563 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended slightly higher Tuesday, with prices rebounding after yesterday's sharp decline, but prospects of a further fall in other vegetable oil markets capped price gains. The benchmark December CPO contract on the Bursa Malaysia Derivatives ended MYR2 higher at MYR2,105 a metric tonne, off an intraday low of MYR2,093/tonne.