October 31, 2006

 

CBOT Soy Outlook on Tuesday: Down 4-6 cents; following e-CBOT price theme

 

 

Soybean futures on the Chicago Board of Trade are seen starting Tuesday's day session on the defensive, as lower overnight indicators are pointing toward a mild setback in prices, traders say.

 

Soybean futures are called to open 4 to 6 cents lower.

 

In e-CBOT trade, November soybeans were 6 1/4 cents lower at US$6.33 1/2 and January was 5 3/4 cents lower at US$6.47 1/2 per bushel.

 

The market is overdue for a consolidation correction, with end of the month positioning, large deliveries against the nearby contract and a pick up is producer selling applying early pressure, analysts said.

 

Lower price action in outside markets is expected to aide the defensive theme, with larger-than-expected deliveries re-emphasizing the vast availability of soybean supplies, analysts added.

 

However, traders will remain on guard for signs of downside exhaustion, as recent attempts at trade consolidation have uncovered speculative buying, a CBOT floor analyst said.

 

Once again, technical indicators are seen taking an active role in the day's activity amid a quiet news front, traders added.

 

A market technician said Monday's price strength dashed notions of a buying exhaustion tail on the daily bar chart, with futures still maintaining a solid upside technical advantage. The next upside price objective for January soybeans is closing prices above solid chart resistance at US$6.75. The next downside price objective is closing prices below solid support at US$6.25.

 

First resistance for January soybeans is seen at Monday's contract high of US$6.56 and then at US$6.60. First support is seen at US$6.50 and then at Monday's low of US$6.47 1/2.

 

U.S. Department of Agriculture reported Monday that 83% of the 2006 U.S. soybean crop was harvested as of October 29. The harvest pace trails the five-year average of 85%. Analysts anticipated a harvested figure between 80% and 85%.

 

In Indiana, 71% of the crop was harvested, compared with 58% last week and the five-year average of 86%. Ohio's soybean crops were reported 68% harvested, up from last week's 53%, and below the five-year average of 84%.

 

The DTN Meteorlogix weather forecast says wet conditions over the eastern Midwest will continue to slow harvest progress early this week before conditions improve in the second half of the week. Next weeks weather may again become wet in the eastern areas.

 

In deliveries, a total of 1,861 delivery notices were posted against the November soybean future. The house account at Term Commodities issued 965 lots with a customer account at Tenco the primary stopper of 564 lots. The last trade date assigned was Oct. 20.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Tuesday. Spot cash soybean bids were down 2 cents in Keokuk, Iowa, down 4 cents in Quincy, Ill., and up 2 cents in Frankfort, Ind., according to cash sources Tuesday.

 

Rotterdam soybeans and soymeal were higher. European vegoils were mixed.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower on profit taking Tuesday, analysts said. The most active May 2007 contract fell RMB18 to settle at RMB2,805 a metric tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply lower Tuesday as the market succumbed to pressure from weaker crude oil and soyoil prices. The benchmark January CPO contract ended down MYR37, or over 2%, at MYR1,661 a metric tonne.