August 21, 2007

 

CBOT Soy Outlook on Tuesday: Up 4-6 cents; carryover buys, crop concerns

 

 

Chicago Board of Trade soybean futures are expected to start Tuesday's session firm, in tune with overnight action, as follow through buying from Monday's firm close and lower than expected crop ratings underpin prices.

 

CBOT soybean futures are called to start the session 4 to 6 cents higher.

 

In overnight e-CBOT trading, September soybeans were 5 3/4 cents higher at US$8.17 1/2, and November soybeans were 5 3/4 cents higher at US$8.33.

 

Monday's close near session highs is seen attracting carryover buying, with declining crop ratings and worries over flooding in the upper Midwest providing price strength, analysts said.

 

Reports of lower than expected pod counts in the eastern Midwest and the vulnerability of upper Midwest crops to diseases if they sit in flooded fields are all seen as supportive features to underpin prices in early trade, analysts added.

 

A technical analyst said serious chart damage has been inflicted recently, including the formation of a bearish head-and-shoulders top reversal pattern. Also, now a bearish pennant pattern has formed on the daily bar chart. The next downside price objective for November soybeans is closing prices below solid support at last week's low of US$8.04 1/2. The next upside price objective is pushing prices above solid technical resistance at US$8.51 1/2, which would fill on the upside last week's big downside price gap on the daily chart.

 

First resistance for November soybeans is seen at US$8.30 and then at US$8.35. First support is seen at Monday's low of US$8.19 and then at US$8.13.

 

The DTN Meteorlogix Weather Service forecast said additional heavy storms may bring more flooding concerns to the western and northern Midwest during the next few days. Meanwhile, hot and dry weather continues over the southeast Midwest until a cold front arrives later this week. In the Delta, hot, dry weather will continue to stress late filling soybeans for at least a few more days, Meteorlogix said.

 

The U.S. Department of Agriculture rated 54% of the soybean crop in good-to-excellent condition, down from 56% a week ago and below last year's rating of 58% in its weekly progress report Monday.

 

In Illinois, 58% of the crop was in good-to-excellent condition, down from 62% a week earlier. Ninety-seven percent of the crop was setting pods, above the average of 88%, and 2% was dropping leaves, above the average of 1%, the USDA said. In Iowa, 76% of the crop was in good-to-excellent condition, up from 71% a week earlier. Ninety-seven percent of the crop was setting pods, above the average of 96%, while none of the crop was dropping leaves, below the average of 1%, the USDA said.

 

Overall, 92% of the U.S. soybean crop was setting pods, up from the average of 88%, and 2% was dropping leaves, matching the average.

 

Crop scouts on the western leg of the John Deere/Pro Farmer U.S Midwest crop tour tallied a 1,068.92 soybean pod count in a three-foot by three-foot square from the 48 samples taken. This is up 15.8% compared to last year's pod count of 922.78 when 42 samples were taken. Scouts were impressed by the moisture available to soybeans with conditions for late season pod filling and setting thought to be favorable.

 

Ohio soybean counts in 2007 are expected to be lower than last year, with hot, dry weather during critical stages of development cited for much of the decline, crop scouts on the eastern leg of the 2007 John Deere/Pro Farmer Midwest Crop Tour said Monday. Officials estimated the Ohio soybean pod count at an average of 1,226.70 pods in a three-foot square area, down 9% from last year's tour estimate of 1,336.20 pods. With so much of the soybean crop being made in August, Pro Farmer doesn't calculate a soybean yield estimate. Instead it uses total pod counts to determine the crop potential.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday, helped by limited soybean supplies. The benchmark May 2008 soybean contract settled RMB41 higher at RMB3,591 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher Tuesday on fresh buying support by hedgers that emerged late in the afternoon, participants said. The benchmark November contract ended at the day's high of MYR2,396/tonne, up MYR30 from the previous close.