October 11, 2006
CBOT Soy Outlook on Wednesday: Mixed; e-CBOT, pre-report squaring
Soybean futures at the Chicago Board of Trade are seen starting Wednesday's session mixed, following the overnight theme as pre-crop report positioning is expected to be a featured attraction.
In e-CBOT trade, November soybeans were 1/4-cent higher at US$5.60 3/4 per bushel.
The market is poised to find some stability heading into Thursday's crop report, with traders eyeing technical levels for near term direction, analysts said.
Mild concerns revolving potential harvest slow downs this week amid cool, wet forecasts for the Midwest are seen providing light support. Overall, the harvest is moving along at an average pace, but with the eastern belt lagging, and slowdowns expected in the eastern belt this week, downside action maybe limited, a CBOT broker says.
Higher outside market influences are supportive to prices as well, but with outlooks for a bearish crop report, and meaningful technical support levels seen as near term objectives, lower price action maybe the path of least resistance, traders added.
A technical analyst said soybeans lost its upside technical momentum Tuesday, and it will take a close above solid technical resistance at this week's high of US$5.76 basis November to provide fresh upside momentum. The next downside price objective is closing prices below solid support at US$5.55.
First resistance for November soybeans is seen at US$5.65 and then at US$5.70. First support is seen at US$5.55 and then at US$5.50.
In its weekly crop progress report Tuesday, the U.S. Department of Agriculture said 47% of the soybean crop was reported harvested, compared to 56% last year and the five-year average of 47%. Analysts expected the harvest between 40%-45%. In the eastern belt states of Indiana and Ohio, the harvest pace was measured at 18% and 15% respectively, compared to their respective five-year averages of 46% and 44%. Sixty-two percent of the U.S. soybean crop was rated in good-to-excellent condition as of Oct. 8, unchanged from a week ago.
The DTN Meteorlogix weather forecast says a major arctic-origin cold wave is heading for the northern Plains and Midwest during the next two days, with rain and snow showers posing a threat of harvest delays in the central and eastern Midwest.
The next 24 to 48 hours will bring light to moderate rainfall of up to one-half inch in the eastern Midwest. A few days of dry weather will then be followed by another round of showers during Monday and Tuesday, with up to one inch of rain in the eastern Midwest. This periodic shower pattern will cause delays in the harvest progress of soybeans, Meteorlogix reports.
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.
In deliveries, a total of 62 delivery notices were posted against the October soyoil future. A customer account at Tenco issued 48 lots with a customer account at RJ O'Brien the primary stopper of 40 lots. The last trade date assigned was October 10.
Rotterdam soybeans and soymeal were lower. European vegoils were mixed.
In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Wednesday, in tandem with Tuesday's correction in CBOT soybean futures. The benchmark January 2007 contract fell RMB15 to settle at RMB2,535 a metric tonne, after trading between RMB2,531/tonne and RMB2,540/tonne.
Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Wednesday on bearish supply and demand data and losses in other key commodities. The benchmark December contract ended down MYR5 at MYR1,553 a metric tonne after trading between MYR1,544 and MYR1,556.
