November 14, 2006

 

CBOT Soy Outlook on Tuesday: Up 1-3 cents; stabilizing after 3-day slide

 

 

Chicago Board of Trade soybean futures are seen starting Tuesday's day session modestly higher, in line with overnight action, attempting to stabilize following a three-day correction.

 

Soybean futures are called to open 1 to 3 cents higher.

 

In e-CBOT trade, November soybeans were 1 1/2 cents lower at US$6.45, and January was 3 cents higher at US$6.60 1/2 per bushel.

 

The market is poised to start firmer Tuesday, with slow farmer selling and good technical support providing strength to prices, said Jason Roose of U.S. Commodities in West Des Moines, Iowa.

 

Solid underlying demand remains an underpinning feature, with a consistent export pace and strong domestic usage aiding the firm tone as well, traders said.

 

However, the market remains volatile, with abundant nearby supplies and favorable planting conditions in South America leaving the market vulnerable to further price setbacks, Roose added.

 

A technical analyst said despite Monday's slide to two week lows, market bulls still have a technical advantage. The next upside price objective is to close prices above solid chart resistance at the January future's contract high of US$6.82 1/2 a bushel. The next downside price objective is closing prices below solid support at US$6.50.

 

First resistance for January soybeans is seen at US$6.60 and then at US$6.65. First support is seen at Monday's low of US$6.55 1/2 and then at US$6.50.

 

The National Oilseed Processors Association reported its members crushed 154.984 million bushels of soybeans during October. The figure was slightly below the average trade estimate of 155.7 million bushels, but up from the 137.3 million NOPA reported for the month of September and up from October 2005's crush figure of 150.9 million. Estimates for the report ranged from as low as 151.5 million bushels to as high as 160 million bushels. Soyoil stocks declined to 2,629,689,000 pounds, down from 2,630,098,000 in September. The average of trade estimates projected stocks at 2.591 billion pounds.

 

U.S. Department of Agriculture reported Monday that 94% of the 2006 U.S. soybean crop was harvested as of Nov. 12. The overall harvest pace is on par with the five-year average of 94%. Analysts anticipated a harvested figure between 93% and 95%.

 

In Indiana, 91% of the crop was harvested compared with 86% last week and the five-year average of 97%. Ohio's soybean crops were reported 89% harvested, up from last week's 77%, but below the five-year average of 95%.

 

The below-average harvest pace in the eastern Midwest raises some concern about possible field losses, but with only a small percentage to make up and abundant nearby supplies, the harvest data shouldn't have an impact price action, a CBOT floor analyst said.

 

Commodity Futures Trading Commission on Monday reported large speculative traders were net long 42,379 combined soybean futures and options contracts as of Nov. 7, compared with net longs of 32,353 in the previous week. Speculative funds were reported net long soyoil futures and options to tune of 47,907 lots, compared with net longs of 36,026 lots in the prior week. Large speculative traders were reported net long combined futures and options positions in soymeal by 30,796 lots, compared with net longs of 21,805 contracts last week.

 

In deliveries, a total of 893 delivery notices recirculated against the November soybean future. Issuers were widely scattered among various commission houses, with the house account at Term Commodities a featured stopper of 433 notices. The last trade date assigned was Monday.

 

Tuesday is the last trading day for November soybean futures. The contract expires at noon CST.

 

In demand news, Taiwan's Breakfast Soybean Procurement Association, or BSPA, will tender for 27,000-60,000 tonnes of U.S. or South America-origin soybeans on Wednesday for December-January delivery, an association official said Tuesday.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Tuesday. Spot cash soybean bids were up 6 cents in central Illinois, down 2 cents in Evansville, Ind., and down 6 cents in St. Louis, according to cash sources Tuesday.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended moderately lower after choppy trade Tuesday, with most participants content to watch prices fluctuate within a narrow range while waiting for fresh leads. The benchmark January contract ended down MYR5 at MYR1,689 a metric tonne.