October 20, 2009

 

CBOT Soy Outlook on Tuesday: Down 2-4 cents in pullback, but rains underpin

 

 

Chicago Board of Trade soybean futures are expected to open 2 to 4 cents lower Tuesday as the market gives back some of Monday's gains.

 

In overnight trade, November soybeans were down 4 1/4 cents to US$9.92 per bushel and January soybeans were down 5 1/4 cents to US$9.95 1/4.

 

December soymeal was down US$1.30 to US$297 per short tonne and December soyoil was down 19 points to 37.40 cents per pound.

 

Traders say a little pull-back amid profit-taking in a "turnaround Tuesday" environment could weigh on the market early. Soybean prices climbed 15 to 20 cents Monday on supportive weather forecasts and a weaker dollar.

 

The weather remains supportive and should limit any losses, traders said.

 

DTN Meteorlogix meteorologist Joel Burgio said in a forecast that rains will return Wednesday and Thursday to the U.S. Midwest, and will be "possibly heavy in some sections." Traders are also eying forecasts calling for more rain, and lousy harvest weather, into next week.

 

"Next week's weather is more uncertain today but I could easily see more rain and cool conditions developing," Burgio said.

 

Outside markets, particularly the weaker dollar, remain supportive and could limit any losses Tuesday, traders said. They said the market is likely to find strong underlying support.

 

"The charts look good, and the money flow is incoming," a trader said.

 

The next upside technical objective for the bulls is pushing and closing November prices above resistance at last week's high of US$10.12 1/4 a bushel, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid technical support at US$9.60 a bushel.

 

First resistance for November soybeans is seen at US$10.00 and then at last week's high of US$10.12 1/4, the technical analyst said. First support is seen at US$9.80 and then at US$9.71.

 

The lousy weather in the Midwest is causing quality concerns and harvest delays, traders said.

 

Monday's U.S. Department of Agriculture crop progress report again highlighted the sluggish pace of the crop. The soybean harvest was 30% complete as of Sunday, up seven percentage points from a week earlier but far below the average of 72%, the USDA said. That was at the low end of trade expectations of 30% to 35% complete.

 

In Iowa, harvest was 37% complete, down from the average of 85%, according to the USDA. In Illinois, the crop was 13% harvested, up from 10% last week but below the average of 79%.

 

Soybeans are basically fully mature, with 95% of the crop dropping leaves, compared to the average of 97%, the USDA said. The crop's good-to-excellent rating was unchanged from last week at 65%.