November 3, 2009

 

CBOT Soy Outlook on Tuesday: Down 3-5 cents; Monday gains overdone, outside markets

 

 

Soybean futures on the Chicago Board of Trade are seen starting Tuesday's day session under pressure on sentiment that Monday's gains were overdone and bearish outside market influences.

 

CBOT soybean futures are seen starting 3 cents to 5 cents lower. In overnight trade, November soybeans were 4 1/4 cents lower at US$9.93 1/4, and January soybeans were 4 1/2 cents lower at US$9.93 1/2.

 

"There are widespread feelings that Monday's late speculative led bounce was overdone, and without any follow through buying overnight, the market is poised for a minor correction," said Victor Lespinasse, analyst with Grainanalyst.com.

 

A firmer U.S. dollar and weakness in crude oil futures add outside market pressure to aide the defensive tone.

 

Warm, dry weather outlooks are seen weighing on the market as well, as the conditions are expected to promote an aggressive harvest pace this week, Lespinasse said.

 

However, downside movement is expected to run into underlying support from the threat of field losses due to heavy rains and flooding that have plagued the U.S. Delta. These threats and uncertainties are expected to keep a level of risk premium in the market until definitive results are seen from harvest activity.

 

A technical analyst said first resistance for November soybeans is seen at US$10.00 and then at Monday's high of US$10.06 1/2. First support is seen at US$9.89 and then at US$9.80.

 

The U.S. Department of Agriculture in its weekly crop progress report Monday said 51% of the U.S. soybean crop was harvested as of Sunday, up from 44% last week but still far behind the five-year average of 87%. Trade expectations ranged from 53% to 57%.

"The report confirmed that harvest activity stayed on a slow pace, but with an open, dry week of weather, farmers should be able to get after it and finish up soybean harvests," said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

Key states remain far behind schedule. Illinois' crop was only 35% harvested, compared to the average of 92%, and Iowa was 54% harvested, compared to the average of 96%.

 

Rain soaked southern areas reported minimal harvest advancement. Forty-three percent of the Arkansas crop was harvested, up 4 percentage points from the previous week. The Mississippi harvest stands at 64% complete, up from 61% last week, and the Missouri crop harvest was reported 33% finished, up 5 percentage points from last week.

 

The DTN Meteorlogix forecast said drier and increasingly warmer weather will help improve conditions for the Midwest harvest at least the next 6 days or so. After that there may be some increase in rain chances. In the Delta, dry weather lasts at least 6 to 7 days before the chance for rain returns to the region, Meteorlogix added.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday following gains Monday on CBOT. The benchmark September 2010 soybean contract settled RMB44 higher at RMB3,734 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Tuesday on fears that higher exports in October have not offset rising output, trade participants said. The benchmark January contract on the Bursa Malaysia Derivatives ended MYR18 lower at MYR2,190 a metric tonne.