March 18, 2009

 

CBOT Soy Outlook on Wednesday: Steady-up 2 cents, Argentine unrest supports

 

 

Soybean futures on the Chicago Board of Trade should be steady to 2 cents higher Wednesday with support from overnight gains and possible supply disruptions in export trade competitor Argentina.

 

In overnight electronic trading, May soybeans rose 2 3/4 cents to US$9.15 3/4 per bushel. The July contract added 3 1/2 cents to US$9.14 and November soybeans ended flat at US$8.61. May soymeal gained US$2.40 to US$288.40 per short tonne and May soyoil dropped 12 points to 31.19 cents per pound.

 

"The markets are biding time before the planting intentions report," a CBOT floor trader said, referring to the U.S. Department of Agriculture's prospective plantings report due for release March 31.

 

Uncertainty over plantings keeps support in the agricultural commodities, but weaker outside markets add pressure, the trader said.

 

Soybeans are finding additional support in continued unrest among farmers in Argentina, traders and analysts said.

 

Talks between Argentina's government and farmers failed to end a bitter dispute over a 35% soy export tax Tuesday. Leaders of Argentina's four top farm groups called on Argentines to mobilize in protest and for the Congress to reform the tax system.

 

Argentine Agrarian Federation president Eduardo Buzzi said as of Tuesday, farmers would again be protesting en masse on the highways of the country, the scene of repeated blockades and rallies over a year's worth of conflict.

 

As Argentina's farmers become angrier, hopefully more business is redirected to the U.S. as buyers look for stable suppliers, the CBOT floor trader said.

 

"Concerns about the pace of Chinese purchases are weighing on the market a little this morning," said Bryce Knorr, Farm Futures senior editor in a Wednesday morning market commentary. "Crushers there are reported to have ample stocks, which could slow purchases, especially from the U.S."

 

But, Knorr added, "worries about the reliability of supplies out of Argentina are building, after more harsh words between the government and farmers there."

 

On the technical side, soybeans hit another four-week high Tuesday and bulls retain upside near-term momentum with prices in a three-week-old uptrend on the daily bar chart, a market technician said.

 

Market bulls are looking to close prices back above solid technical resistance at US$9.40 a bushel, the technician said, marking first resistance at Tuesday's high of US$9.21 3/4, then at US$9.30.

 

The bears are working to close May soybeans below solid technical support at the March low of US$8.38 1/4 a bushel, he said, pegging first support at Tuesday's low of US$9.02 3/4 and then at US$9.00.

 

In other global trading news, Chinese soybean futures traded on the Dalian Commodity Exchange settled slightly lower Wednesday as the market lacked upward momentum.

 

The benchmark September 2009 soybean contract settled RMB17 lower at RMB3,508 a metric tonne, after trading between RMB3,491-RMB3,536/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Wednesday, unable to sustain earlier gains as demand eased in the cash market and on speculative long liquidation, said trade participants.

 

The benchmark June contract on the Bursa Malaysia Derivatives ended MYR17 lower at MYR1,905 a metric tonne, off an intraday high of MYR1,948.

 

India will likely soon consider a soyoil import tax cut from 20%, people familiar with the matter said Wednesday. And while India's soymeal exports are likely to benefit from a poor soybean crop in Brazil and Argentina, slower purchases by customers due to the economic slowdown is likely to drag down any hopes of a rise in shipments from a year ago, traders said Wednesday.

 

"It is very difficult to find a buyer. People are buying only if they are in a dire need," said a leading trader based out of Indore, the hub of India's edible oil and oilmeal trade.