October 7, 2008

 

CBOT Soy Outlook on Tuesday: Up 10-15 cents; bounce, outside market stablity

 

 

Supportive signals from outside markets are pointing to firmer price action in Chicago Board of Trade soybean futures to start Tuesday's day session.

 

CBOT soybean futures are called 10 to 15 cents higher.

 

In overnight electronic trading, November soybeans were 19 3/4 cents higher at US$9.41 3/4. December soyoil was 27 points higher at 40.27 cents per pound and December soymeal was US$7.80 higher at US$257.70 per short tonne.

 

The market remains focused on the turmoil in financial markets, and with signs of some stability overnight, with the U.S. dollar weaker and crude futures higher, the trade is poised for a recovery bounce after Monday's 70 cent limit down plunge, a CBOT floor analyst said.

 

Commercial bargain hunting and technical short covering is expected to lead the gains, with lagging harvest progress, variable yield reports and solid demand providing fundamental support to prices, analysts added.

 

However, fundamental influences remain in the background, with trader's attention clearly focused on the uncertainties of a global financial crisis.

 

A technical analyst said the market is still short-term oversold and due for an upside corrective bounce very soon. The next upside price objective for November soybeans is to push and close prices above solid technical resistance at Monday's high of US$9.83 a bushel. The next downside price objective is pushing and closing prices below major psychological support at US$9.00.

 

First resistance for November soybeans is seen at US$9.50 and then at US$9.83. First support is seen at US$9.00 and then at US$8.75.

 

U.S. Department of Agriculture said 31% of the soybean crop was harvested, up from 9% last week, but below the five-year average of 41%. Last year, 43% of the crop had been harvested. Analysts had predicted 22% to 26% of the crop would be harvested.

 

The report showed the soybean harvest pace is moving at a faster clip than the trade was anticipating despite lagging the normal pace of cuttings, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The USDA said 83% of the soybean crop was dropping leaves, compared to 68% a week ago and the five-year average of 91%. The USDA said 57% of the crop was in good-to-excellent condition, unchanged from last week.

 

The DTN Meteorlogix weather forecast said rain and showers in the Midwest Monday and Tuesday will likely cause harvest delays. The next chance for rain comes early next week, especially likely in the western areas. However, there's no significant cold weather threat during the next 7 days.

 

In the Delta, rain and thunderstorms Tuesday likely mean delays to summer crop harvests, Meteorlogix said

 

In deliveries, October soymeal deliveries totaled 57 lots. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was Oct. 1.

 

Oct. soyoil deliveries totaled 3,010 lots. Issuers were scattered among various commission houses, while the house account at ADM Investor Services was the primary stopper of 1,597 lots. The last trade date assigned was Oct. 6.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled limit-down for the second session in a row Tuesday, tracking the counterparts' huge losses on CBOT Monday. The benchmark January 2009 soybean contract settled RMB191 lower at RMB3,643 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended off highs Tuesday, after rising almost 4.0% on short covering, as concerns over global economy continued to weigh on prices, said trade participants. The December contract ended MYR30 higher Tuesday at MYR1,850 a metric tonne.