October 10, 2006

 

CBOT Soy Outlook on Tuesday: Down 1-3 cents; e-CBOT, consolidating gains

 

 

Soybean futures at the Chicago Board of Trade are poised to start Tuesday's day session slightly lower, influenced by overnight price action amid ideas recent gains were a bit overdone.

 

Soybean futures are called to open 1 to 3 cents lower.

 

In e-CBOT trade, November soybeans were 1 1/2-cent lower at US$5.73 per bushel.

 

The absence of fresh supportive news to sustain recent prices spikes have traders anticipating some consolidative price action, as record projected production and inventories remain bearish features, analysts said.

 

The market will continue to watch activity in the neighboring wheat market, with prices soaring to limit up levels overnight, a broker said. However, after prices spiked 32 cents higher during the past week, the market is overdue to stabilize in the midst of the harvest of a potentially record crop, he added.

 

A market technician said soybean futures have fresh upside technical momentum following recent price action. However, it will take a move above technical resistance at US$5.94 - which would fill a big downside price gap on the daily bar chart that was created in early August - to provide stronger upside technical momentum, he said. The next downside price objective for the bears is closing prices below solid support at US$5.55, he added.

 

First resistance for November soybeans is seen at Monday's high of US$5.76 and then at US$5.80. First support is seen at US$5.70 and then at Monday's low of US$5.65.

 

The DTN Meteorlogix weather forecast says some rain showers will precede much colder weather in the U.S. Midwest. Some light snow or rain is possible once the cold air moves into the region at midweek. Cold and dry conditions are on tap for the end of the week with widespread freezing conditions. Rain returns early next week with temperatures remaining below normal. The weather pattern during the next 7-10 days will disrupt and delay the Midwest fall harvest, Meteorlogix forecasts.

 

In deliveries, a total of 618 delivery notices were posted against the October soyoil future. A customer account at JP Morgan issued all the notices with a customer account at Tenco the primary stopper of 429 lots. The last trade date assigned was Sept. 29.

 

On tap for Tuesday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report 10:00 a.m. CDT and weekly crop progress report at 3:00 p.m. CDT. The reports normally released on Mondays were postponed due to the Columbus Day holiday.

 

USDA will release its latest crop production and supply/demand forecasts Thursday 7:30 a.m. CDT. The average of analysts estimates taken from a survey compiled by Dow Jones Newswires for 2006-07 U.S. soybean production based on conditions as of Oct. 1 pegs the crop at 3.213 billion bushels. The estimates ranged from 3.155 billion bushels to 3.326 billion bushels. The average of estimates pegged 2006-07 ending stocks at 588 million bushels. The estimates ranged from 521 million to 671 million bushels.

 

Meanwhile, China National Grain and Oils Information Center said Tuesday that it cut its forecast of soybean output for 2006 to 15.5 million metric tonnes from its September forecast of 15.9 million tonnes.

 

Rotterdam soybeans and soymeal were higher. European vegoils were higher.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Tuesday on strong gains at CBOT Monday, analysts said. The benchmark January 2007 contract settled CN11 higher at RMB2,550 after trading between RMB2,540/tonne and RMB2,557/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly higher Tuesday, boosted by a combination of factors including higher soyoil futures. The benchmark December CPO contract ended at MYR1,558 a metric tonne, up MYR4 from Monday.