October 16, 2007

 

CBOT Soy Outlook on Tuesday: Up 3-5 cents; crude oil, harvest weather eyed

 

 

Chicago Board of Trade soybean futures are seen starting Tuesday's day session on firm footing, taking their cue from overnight trade, with lingering concerns surround harvest slowdowns and higher energy prices underpinning.

 

CBOT soybean futures are called to start the session 3 to 5 cents higher.

 

In overnight e-CBOT trading, November soybeans were 3 3/4 cents higher at US$9.90 3/4 per bushel, and January gained 2 1/4 cents to US$10.08.

 

The combination of new all time highs in crude oil futures lending support to soybeans and soyoil and worries that harvest delays in the midwest could open up the door for field losses is serving as a catalyst to project a higher start, analysts said.

 

Crude oil futures soared to a new all-time high of US$87.97 per barrel overnight.

 

Despite the current U.S. harvest pace moving at a normal to above normal pace, traders will be looking at the weather forecast to see if any problems develop in getting the remainder of the crop harvested, said Don Roose, president U.S. Commodities In West Des Moines, Iowa.

 

With a tight projected supply situation, soybeans can't afford harvest losses of any magnitude and the market will keep some risk premium in prices until the harvest is complete, he added.

 

U.S. Department of Agriculture reported that 66% of the U.S. crop was harvested as of Sunday, within the 65% to 70% expected by analysts and equal to the 66% harvested in 2006 and just above the five-year average of 65%.

 

In Iowa, 71% of the crop has been harvested, compared to 84% last year and the 82% average. In Illinois, 86% of the crop has been combined, above the 72% five-year average. In Minnesota, 84% of the crop was reported harvested, compared to the 90% last year and the average of 73%. In Indiana, the harvest was 69% complete, compared to 45% in 2006 and the average of 60%.

 

Meanwhile, a technical analyst said market bulls have regained solid upside technical momentum. The next upside price objective for November soybeans is to push and close prices above major psychological resistance at US$10.00. The next downside price objective is closing prices below solid support at US$9.70.

 

First resistance for November soybeans is seen at last week's high of US$9.93 and then at US$10.00. First support is seen at Monday's low of US$9.81 1/2 and then at US$9.74.

 

The DTN Meteorlogix Weather Service forecast said wet or very wet weather in the western Midwest this week likely means delays and disruptions to corn and soybean harvests.

 

In Brazil, recent rainfall has helped improve soil moisture for planting early soybeans in Mato Grosso, however more rain is needed. The next significant chance for rainfall does not come until early next week sometime. This pattern bears watching as it could still be too dry and hot at times, Meteorlogix said.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled up Tuesday on the heels of gains in CBOT soybean futures Monday. The benchmark May 2008 soybean contract rose RMB26 to settle at RMB4,256 a metric tonne, after trading between RMB4,242/tonne and RMB4,269/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange rose for fifth straight day of trading Tuesday, with the benchmark contract setting new historic highs amid heavy support, taking bullish cues from other commodities. The benchmark January CPO contract on Bursa Malaysia Derivatives ended at MYR2,765 a metric tonne, up MYR47 from Friday and briefly reaching an intraday high of MYR2,791/tonne.