October 23, 2007

 

CBOT Soy Outlook on Tuesday: Up 5-7 cents; feeding off outside markets' support

 

 

Soybean futures on the Chicago Board of Trade are poised for a firmer start to Tuesday's day session, feeding off the overnight theme, with strength in outside inflationary markets underpinning prices, analysts said.

 

CBOT soybean futures are called to start the session 5 to 7 cents higher.

 

In overnight e-CBOT trading, November soybeans were 7 cents higher at US$9.83 1/2 per bushel, and January soybeans were 7 3/4 cents higher at US$10.01 1/2.

 

A quiet news front once again keeps the influence of outside markets in play, with a lower U.S. dollar bolstering strength in crude oil and metals futures, expected to attract speculative buying in grains and oilseed markets as well, analysts said.

 

The market managed to end off its lows Monday, and that trend carried over into the overnight session. The ability of futures to find support beneath the market opens the door to a modest recovery Tuesday amid supportive long range fundamental outlooks, analysts added.

 

However, the market remains vulnerable to a downward correction, as improvement in Brazil's weather outlook removes the daily flow of supportive news needed to sustain a rally near term, said Farm Futures analyst Arlan Suderman in a morning report.

 

Otherwise, early directives are scarce, with harvest progress moving as expected and fresh news limited, a CBOT floor analyst added.

 

A technical analyst said despite Monday's declines market bulls still have the near-term technical advantage, but have faded recently. The next upside price objective for January soybeans is to push and close prices above solid technical resistance at last week's high of US$10.15. The next downside price objective is closing prices below solid support at Monday's low of US$9.80.

 

First resistance for January soybeans is seen at Monday's high of US$10.02 and then at US$10.11. First support is seen at US$9.90 and then at US$9.85.

 

U.S. Department of Agriculture reported 75% of the U.S. soybean crop was harvested as of Sunday, just off the 76% harvested pace at the same time last year and below the five-year average of 78%. Analysts had expected the harvest to be 72% to 80% complete.

 

The harvest figures were right in line with estimates and should not have any significant impact on the market, analysts said.

 

Meanwhile, harvest progress is expected to pick up this week, with clearer weather on the horizon, said Don Roose, president U.S. Commodities in West Des Moines, Iowa. Producers "can move pretty fast" to make up for any lost time when it comes to harvesting, he added.

 

In Iowa, 76% of the crop has been harvested, compared to 90% at the same time last year and the five-year average of 93%. In Illinois, 93% of the crop has been harvested, above the 81% finished last year and the average of 84%. In Minnesota, 86% of the crop was harvested, compared to 98% last year and the average of 89%. In Indiana, the harvest was 82% complete, compared to 57% in 2006 and the average of 75%.

 

The DTN Meteorlogix Weather Service forecast said mainly dry conditions are on tap for the western U.S. Midwest Tuesday through Thursday. Temperatures will average below normal Tuesday and Wednesday, and near to below normal Thursday. In the eastern Midwest, rain may linger through southern and eastern areas Tuesday, but mainly dry for southern areas Thursday. Temperatures will average below normal Tuesday and Wednesday, and near to below normal Thursday.

 

In Brazil, recent rainfall has helped improve soil moisture for planting early soybeans in Mato Grosso. Scattered thundershowers are possible again during this week.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday on stronger soyoil prices. The benchmark May 2008 soybean contract settled RMB60 higher at RMB4,287 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower for the second straight day Tuesday, on weak export fundamentals and cues from soyoil and crude oil prices, market participants said. The benchmark January CPO contract on Bursa Malaysia Derivatives ended MYR10 lower at MYR2,704 a metric tonne after reaching an intraday high of MYR2,753/tonne.