October 2, 2007

 

CBOT Soy Outlook on Tuesday: Down 10-12 cents on e-CBOT, harvest progress

 

 

Chicago Board of Trade soybean futures are expected to start day session trading 10-to-12 cents lower Tuesday on spillover weakness from the overnight session, favorable harvest progress and weaker palm oil prices overseas, analysts said.

 

In overnight e-CBOT trading, November soybeans dropped 11 cents to US$9.80 1/2 per bushel, and January declined 12 1/2 cents to US$9.97. e-CBOT volume in November was 9,804 contracts.

 

Soybeans should start out under pressure based off of the overnight weakness and good harvest progress reported Monday, an analyst said.

 

The USDA reported that 29% of the U.S. soybean crop was harvested as of Sept. 30, above the 18% cut in 2006 as well as the five year average of 24%. Eighty-eight percent of the crop was reported dropping leaves, above the average of 84%.

 

In Illinois, 43% of the crop has been harvested compared to the average of 25%. In Iowa, 35% of the crop has been combined, compared to the average of 30%.

 

Palm oil was lower overnight and energy prices were under pressure as well and should help keep prices on the defensive, the analyst said. In addition the dollar is stronger after recent weakness and that could also act as a drag on prices, the analyst said.

 

A private crop forecaster's soybean production estimate might also temper buying interest, a commission house analyst said. Late Monday, FC Stone estimated 2007 U.S. soybean production at 2.722 billion bushels with a yield of 43 bushels per acre. In September, the USDA pegged 2007 soybean production at 2.619 billion bushels with a yield of 41.4 bushels per acre.

 

The USDA is scheduled to release updated production estimates on Friday Oct. 12 at 8:30 a.m. EDT.

 

On daily technical charts, November soybeans closed near the session low. Good harvest activity in the U.S. Corn Belt limited buying interest Monday, a technical analyst said. Soybean prices remain in a steep uptrend from the August low, with still no signs of a market top being in place, the analyst said. The bulls' next upside price objective is closing prices above the November contract high of US$10.17 1/2 per bushel, while the next downside price objective for market bears remains closing prices below solid support at US$9.79.

 

First resistance for November soybeans is seen at US$9.98 1/4, Monday's high and then at US$10.00. First support is seen at US$9.90 1/2, Monday's low and then at US$9.85 1/2.

 

In overseas markets, crude palm oil futures ended sharply lower on the Bursa Malaysia Derivative Exchange with the benchmark December contract down MYR49 at MYR2,569/tonne

 

Soybean futures on China's Dalian Commodities Exchange remained closed due to a holiday.