July 8, 2008
CBOT Soy Outlook on Tuesday: Down 25-35 cents; carryover, weather, outside markets
Chicago Board of Trade soybean futures are seen starting Tuesday's day session sharply lower, continuing Monday's speculative liquidation on improved crop outlooks and bearish outside market influences.
CBOT soybean futures are called 25 to 35 cents lower.
In overnight electronic trading, July soybeans were 26 1/4 cents lower at US$15.62 3/4 and November soybeans were 35 1/2 cents lower at US$15.25 1/2. December soyoil was 89 points lower at 65.61 cents per pound and December soymeal was US$10.90 lower at US$398.10 per short tonne.
The market is poised to continue Monday's corrective setback, with broad-based commodity weakness and an improved crop outlook enticing traders to reduce risk premium in the market, analysts said.
The market remains faced with a plethora of defensive influences, said a CBOT floor analyst. Overbought conditions after last week's run to record highs, a stronger U.S. dollar, declines in energy and metal prices, with beneficial near term weather outlooks serving as the catalysts to keep traders looking for underlying support, he added.
Nevertheless, bullish underlying fundamentals, with tight projected stocks are expected to limit downside pressure. The market remains faced with a host of uncertainties from production and supply that will continue to project supportive longer range outlooks, analysts added.
A technical analyst said no serious chart damage occurred in Monday's downward price action. The next upside price objective for November soybeans is to push and close prices above solid resistance at the contract high of US$16.36 3/4 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 US$15.79 and then at US$16.00. First support is seen at US$15.50 and then at US$15.40.
U.S. Department of Agriculture said the good-to-excellent condition rating for the U.S. soybean crop was 59%, one percentage point above the previous week. In Iowa, the good-to-excellent condition rating for the soybean crop was 57%, one percentage point above the preceding week. In Illinois, 56% of soybeans were in good-to-excellent condition, a four percentage-point gain on the week.
The USDA also said 12% of the U.S. soybean crop has bloomed as of Sunday, up from 4% last week but below the five-year average of 26%. The USDA said 95% of the U.S. soybean crop has emerged, up from 90% last week but below the five-year average of 98%.
The late planting of some soybeans has put overall plant development behind the normal pace. "There is going to be a definite need for the first fall frost to be around its normal time (as opposed to early)," said Joel Karlin, sales manager and commodity sales coordinator for Western Milling.
In overseas markets, China's soybean meal futures traded on the Dalian Commodity Exchange settled sharply lower Tuesday, tracking a fall on CBOT Monday. The benchmark January 2009 soy meal contract settled RMB172 lower at RMB3,931 a metric tonne, or down 4.2%. The benchmark January 2009 soybean contract settled RMB162 lower at RMB4,920/tonne, or down 3.2%.
Crude palm oil futures on Malaysia's derivatives exchange closed 1.65% lower Tuesday on long liquidation, hitting their lowest level in nearly five weeks as investors took cues from prevailing weakness across the commodities spectrum. The benchmark September contract on the Bursa Malaysia Derivatives ended MYR58 lower at the day's low of MYR3,454 a metric tonne.