July 1, 2008

 

CBOT Soy Outlook on Tuesday: Mixed; supply tightness, new crop weather

 

 

Soybean futures at the Chicago Board of Trade are seen starting Tuesday's day session mixed, with nearby contracts up on tight supplies, while new crop futures garner pressure from improved weather conditions.

 

CBOT soybean futures are called mixed, with old crop contracts up 2 to 3 cents and new crop futures down 1 to 2 cents.

 

In overnight electronic trading, July soybeans were 1 3/4 cents higher at US$16.06 3/4 while November soybeans were 2 1/2 cents lower at US$15.71 1/4. December soyoil was 5 points higher at 67.80 cents per pound and December soymeal was US$3.00 higher at US$409.00 per short tonne.

 

A very tight supply outlook for old crop soybeans continues to feed bullish appetites, with the absence of deliveries and supportive outside market influences expected to underpin the front end of the market, analysts said.

 

Meanwhile, favorable near term Midwest weather conditions for the Midwest are seen taking some edge off new crop contracts, a cash connected CBOT broker said. A more normal weather pattern will aid crop development and allow for some last minute plantings as well, he added.

 

However, pressure on the back end of the market is seen limited, as the late developing crop opens the door for late season weather risks, and even with improved crop chances, the market is still faced with a tight ending stock forecasts in the upcoming marketing year, analysts added.

 

A technical analyst said market bulls have solid near-term technical momentum on their side. The next upside price objective for November soybeans is to push and close prices above major psychological resistance at US$16.00 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$15.00.

 

First resistance for November soybeans is seen at the contract high of US$15.79 and then at US$16.00. First support is seen at US$15.50 and then at Monday's low of US$15.30.

 

The USDA said the good-to-excellent condition rating for the U.S. soybean crop was 58%, one percentage point above the previous week.

 

Traders had expected a one-to-three percentage point rise in the good-to-excellent condition rating from the previous week.

 

In Iowa, the good-to-excellent condition rating for the soybean crop was 56%, six percentage points above the preceding week. In Illinois, the good-to-excellent condition rating for the soybean crop was 52%, one percentage point above the preceding week.

 

The USDA said 95% of the U.S. soybean crop was planted, up from 91% last week but below the five-year average of 98%. The USDA said 90% of the soybean crop has emerged, up from 82% last week but below the five-year average of 96%. The USDA also said 4% of the U.S. soybean crop has bloomed, up from 2% last week but below the five-year average of 11%.

 

The DTN Meteorlogix weather forecast said the western U.S. Midwest will experience dry conditions Tuesday, with scattered showers and thunderstorms developing on Wednesday continuing in southern areas into Thursday. Rainfall totals of .30-1.50 inches are expected.

 

In the eastern Midwest, mostly dry conditions are seen during the next 48 hours. Episodes of scattered showers and thunderstorms are seen for Thursday and Friday. Rainfall totals of .50-2.00 inches are expected, Meteorlogix said.

 

In overseas markets, China's soybean futures traded mostly higher on the Dalian Commodity Exchange, tracking the overnight rally at CBOT on tight supply forecasts. The benchmark January 2009 soybean contracts settled RMB21 higher at RMB5,144/tonne, or 0.4%, after trading between RMB5,105-RMB5,148/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Tuesday as weak exports amid rising stocks weighed heavily on prices, said trade participants. The benchmark September contract on the Bursa Malaysia Derivatives ended down MYR23 at MYR3,575 a metric tonne.