March 16, 2010

 

CBOT Soy Outlook on Tuesday: Up 2-4 cents, firm cash, outside market support

 

 

Soybean futures at the Chicago Board of Trade are seen starting Tuesday's day session on firm footing, underpinned by firm cash prices and supportive outside markets.

 

CBOT soybeans are seen opening 2 cents to 4 cents higher.

 

Overnight, CBOT May soybeans were 4 1/2 cents higher at US$9.34 1/2 a bushel.

 

A quiet news front is expected to produce some choppy activity, with traders eyeing outside macro markets while looking ahead to end-of-month planting and stocks reports.

 

The U.S. dollar is lower, with crude oil and metal futures higher in early trade. A lower U.S. dollar supports commodity prices due to perceptions it increases investors' appetite for risk and makes U.S. grain cost less in world markets.

 

Underlying support is seen from firm cash basis levels amid limited cash market selling in the U.S. and South America. Logistic problems in Brazil due to a record harvest and rainy weather last week overwhelming transportation capacity is expected to aid the firm tone, analysts said.

 

Any sustained delays to Brazil movement of soybeans from ports could shift some business to U.S. shores, said Victor Lespinasse, analyst with GrainAnalyst.com.

 

Monday's higher-than-expected crush report is sparking talk that the strong crush pace could force the U.S. Department of Agriculture to further tighten the 2009-10 U.S. soybean balance sheet, according to a market note from Midwest Market Solutions.

 

However, upside movement is seen limited, as South American soybean crops continue to exceed market expectations. Meanwhile, uncertainty about spring weather and seedings, and the potential impact of the Federal Reserve's FOMC meeting limits trader's appetite for risk.

 

A technical analyst said first resistance for May soybeans is seen at US$9.38 and then at US$9.50. First support is seen at Monday's low of US$9.21 3/4 and then at US$9.11.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday, along with Monday's gains on CBOT. The September 2010 soybean contract settled up RMB20, or 0.5%, at RMB3,820 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended marginally lower in volatile trade Tuesday amid both long liquidation and fresh buying. The June contract on Bursa Malaysia Derivatives ended MYR6 lower at MYR2,569 a metric tonne.