October 3, 2006

 

CBOT Soy Outlook on Tuesday: Down after overnight losses

 

 

Soy complex futures at the Chicago Board of Trade are seen starting Tuesday's day session softer following overnight weakness and follow-through selling from Monday's softer close. Benchmark November soybean futures are called to open 1-3 cents weaker.

 

In e-cbot trade, November soybeans finished the overnight session down 1 1/2 cents at US$5.43 3/4 a bushel. Soymeal fell 40 cents at US$163.10 a short tonne while soyoil slipped 4 points to 23.90 a pound.

 

With the losses expected in wheat futures, soybeans are likely to be lower. However, because soybeans were already weaker on Monday, the market will likely see limited losses, at least initially, analysts said.

 

In its weekly crop progress report Monday, the U.S. Department of Agriculture said 19% of the crop was reported harvested, compared to 33% last year and the five-year average of 26% as rains have delayed cutting. Analysts expected the harvest between 16%-26%. Sixty-two percent of the U.S. soybean crop was rated in good-to-excellent condition as of Oct. 1, unchanged from a week ago.

 

"That's really not surprising, given all the rains. Plus it's still early," a long-time analyst said. "We can make that up quickly."

 

DTN Meteorolgoix said wet weather will continue to delay Midwestern harvests in the eastern areas during this week and possibly next week as well. Harvest weather is much better in the west. In the Delta favorable harvest weather continues for at least another five to seven days.

 

In Brazil, widespread rain and thunderstorms should cover the major growing areas during the next five to seven days. The heaviest of this rain should occur in Parana, Mato Grosso Do Sul and Rio Grande Do Sul. However, the other areas should see at least moderate activity.

 

Brazilian soybean exports for September declined to 1.9 million metric tonnes compared to 2.9 million metric tonnes in August and 2.2 million tonnes in September 2005, the Foreign Trade Ministry said late Monday. Soymeal exports declined on the month to 1.3 million tonnes compared to 1.5 million tonnes in August, but up from 1 million in September 2005. Soyoil exports declined to 113,200 tonnes compared to 176,000 in August and 113,600 in September 2005.

 

In other news, a western Kentucky grain company is building a US$22 million biodiesel production plant.

 

CBOT November soybean prices continue to show a bearish posture, a technical analyst said. Bears are now shooting for a close below support at the contract low of US$5.37 1/2. It will take a close above technical resistance at the September high of US$5.63 in November beans to provide the bulls with some fresh upside technical momentum. First resistance is seen at US$5.50 and then at US$5.54 3/4. First support is seen at US$5.40 and then at US$5.37 1/2.

 

"Given a general lack of individual news, soybeans are likely to chop around," the analyst said.

 

In other news, Rotterdam soybean and soymeal prices were steady. European vegoils were steady to weaker.

 

China futures markets are closed for a holiday this week.

 

Crude palm oil futures ended sharply down on the Bursa Malaysia Derivatives Tuesday, pressured by weakness in key external markets and a lack of bullish fundamental cues. The benchmark December contract shed MYR24 to settle at MYR1,534/tonne.