August 5, 2008
CBOT Soy Outlook on Tuesday: Lower; liquidates on negative influences
Soybean futures on the Chicago Board of Trade are poised for a sharply lower start to Tuesday's day session, following through on an overnight tumble, as speculative liquidation is seen continuing.
CBOT soybean futures are called 35 to 40 cents lower.
In overnight electronic trading, August soybeans were 42 1/4 cents lower at US$12.44 3/4 and November soybeans were 35 cents lower at US$12.60. December soyoil was 159 points lower at 53.72 cents per pound and December soymeal was US$7.10 lower at US$338.90 per short tonne.
The market has a plethora of negative influences expected to set the stage for a lower tone, analysts said. A stronger U.S. dollar, weaker crude oil and metal prices, non-threatening weather, improved crop ratings and an overnight plunge in Asian prices serve as the catalyst for the losses, analysts added.
Liquidation across global commodity markets remains the featured theme, with traders anticipating technical selling will play a key role as well, with the most active November future dropping below its 200-day moving average overnight, a CBOT floor trader said.
A technical analyst said serious near-term chart damage occurred Monday. Prices are in a steep four-week-old downtrend on the daily bar chart, and technical odds are high that at least a near-term market top is now in place.
The next upside price objective for November soybeans is to push and close prices above solid technical resistance at Monday's high of US$13.61 a bushel. The next downside price objective is pushing and closing prices below solid technical support at US$12.50. First resistance for November soybeans is seen at US$13.00 and then at US$13.25. First support is seen at US$12.85 and then at US$12.70.
The DTN Meteorlogix weather forecast said reproductive soybeans in the U.S. Midwest should benefit from cooler temperatures and scattered thundershowers during the next several days, with no significant heat in sight.
In the Delta, dry and hot weather continues to stress soybeans at this time. However, it should turn cooler with at least some chance for showers later this week, Meteorlogix added.
U.S. Department of Agriculture said Monday the good-to-excellent condition rating for the U.S. soybean crop was 63%, one percentage point above the previous week.
Traders were expecting the good-to-excellent condition to remain unchanged or drop by up to two percentage points.
The USDA said 78% of the U.S. soybean crop has bloomed, up from 62% last week but below the five-year average of 88%. In top soy producer Iowa, blooming of the soybean crop stood at 83%, up from 67% the preceding week but below the average of 95%. In Illinois, 74% of soybeans were blooming, up from 53% last week but below the average of 93%.
The USDA said 37% of the U.S. soybean crop was setting pods, up from 21% the preceding week but below the five-year average of 58%.
Commodity risk management firm FC Stone on Monday estimated the 2008-09 U.S. soybean crop at 2.993 billion bushels, with a yield of 41.5 bushels. The U.S. Department of Agriculture, in its July supply and demand report, estimated 2008 U.S. soybean production at 3 billion bushels, with a yield of 41.6 bushels.
The USDA is scheduled to release its first U.S. corn and soybean estimates using field surveys at 8:30 a.m. EDT Aug. 12.
In deliveries, August soybean deliveries totaled 8 lots. Issuers and stoppers were scattered among commission houses. The last trade date assigned was June 27.
In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange tumbled Tuesday on supply pressure, and analysts said the fall may continue for a while before hitting bottom. The benchmark soybean, soybean oil and palm oil futures hit limit-down for the second straight session.
Crude palm oil futures on Malaysia's derivatives exchange fell as much as 6.6% Tuesday, slumping to a nine-month low of MYR2,700 per metric tonne on weak soyoil prices and defaults on purchases by overseas buyers. The benchmark October contract on Bursa Malaysia Derivatives ended MYR140, or 4.8% lower at MYR2,750/tonne.