October 27, 2009

 

CBOT Soy Outlook on Tuesday: Seen steady; lacks clear directives

 

 

Chicago Board of Trade soybean futures are poised to start Tuesday's day session with a steady undertone, as the market takes a cautious approach in the absence of clear directive signals ahead of the opening.

 

CBOT soybean futures are seen starting steady to 1 cent higher. In overnight trade, Nov soybeans were 1/4 cent higher at US$9.86 3/4, and Jan soybeans were unchanged at US$9.88 3/4.

 

The market is seen following the overnight theme, with choppy, two-sided action possible, as traders eye movements in outside financial markets and updated weather models, a CBOT floor analyst said.

 

Consolidation from Monday's price declines is seen stabilizing price movement, with traders seemingly discounting harvest delays this week in anticipation of drier weather conditions next week in the U.S. Midwest.

 

U.S. Department of Agriculture's weekly crop progress report released Monday failed to provide any fundamental surprises leaving participants to key in on outside influences and weather once again, analyst said.

 

In early trade, the U.S. dollar index is lower and crude oil futures are posting modest gains.

 

USDA said 44% of the soybean crop was harvested as of Sunday, up from 30% last week but still far behind the five-year average of 80%. Trade expectations ranged from 40% to 51%. Key states remain far behind schedule. Illinois' crop was only 33% harvested, compared to the average of 86%, and Iowa was 47% harvested, compared to the average of 91%.

 

Meanwhile, Ohio soybean harvest made solid progress last week, with the harvest pegged at 75% complete, up from 34% in the previous week, and just shy of the 5-year average of 78%.

 

The ability of the Ohio harvest to jump from 34% to 75% in one week, "shows that once a window opens - harvest will commence and finish quickly," said Benson Quinn Commodities analyst Kim Rugel.

 

A market technician said first resistance for November soybeans is seen at US$10.00 and then at US$10.12 1/4. First support is seen at Monday's low of US$9.81 and then at US$9.71.

 

The T-storm Weather forecast said rain will stop harvesting in the Delta and the southeast third of the corn-belt through Tuesday night. Rain will stop harvest operations across the entire central and southern U.S. crop belt from Wednesday night through Friday night.

 

A drying pattern begins in the central U.S. this weekend, though a few showers dot the corn-belt Sunday and Monday. Despite a few showers next week, improved weather for drying and harvesting will occurs, T-storm Weather added in the forecast.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Tuesday, as external market movements spurred a correction in prices after recent sustained gains. The new benchmark September 2010 soybean contract settled 0.6% lower at RMB3,705 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange finished lower Tuesday amid selling pressure, rising inventories and sluggish exports, trade participants said. The benchmark January contract on the Bursa Malaysia Derivatives settled down MYR48 at MYR2,170 a metric tonne.