April 8, 2008

 

CBOT Soy Outlook on Tuesday: Up 3-5 cents; consolidates ahead of USDA report

 

 

Soybean futures on the Chicago Board of Trade are poised for a firmer start to Tuesday's day session, bouncing back from Monday's losses as the market consolidates heading into Wednesday's supply and demand report.

 

CBOT soybean futures are called to start the session 3 to 5 cents higher.

 

In overnight electronic trading, May soybeans were 2 1/2 cents higher at US$12.57 1/2, July soybeans were 4 1/2 cents higher at US$12.77. May soyoil was 28 points higher at 56.25 cents per pound and May soymeal was US$1.00 lower at US$329.00 per short tonne.

 

A quiet news front and a lack of leadership from outside markets is seen promoting a choppy atmosphere, as traders even up positions ahead of Wednesday's U.S. Department of Agriculture supply and demand report, analysts said.

 

The uncertainty surrounding the report is seen producing some cautious trading activity, with traders unwilling to take on added risk, particularly with a wide range of estimates on ending stocks from an analyst's survey, analysts added.

 

USDA is scheduled to release its April supply and demand estimates Wednesday at 8:30 a.m. EDT. The average of analysts estimates in a Dow Jones Newswires survey peg 2007-08 soybean ending stocks at 157 million bushels, up from the March estimate of 140 million. The estimates ranged from 120 million to 180 million bushels.

 

Technically inspired action will be featured in the absence of fresh news, with the rolling of positions active also, as participants exit spot month contracts ahead of the delivery period, traders said.

 

A technical analyst said July soybean prices Monday closed solidly lower and nearer the session low, scoring a bearish outside day down on the daily bar chart. Prices are still in a five-week-old downtrend on the daily bar chart, he added.

 

The next upside price objective for July soybeans is to push and close prices above solid technical resistance at Monday's high of US$13.11 a bushel. The next downside price objective is pushing and closing prices below solid technical support at US$12.50. First resistance for July soybeans is seen at US$12.90 and then at US$13.00. First support is seen at Monday's low of US$12.64 and then at US$12.50.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mixed Tuesday, following losses on CBOT Monday. The benchmark January 2009 soybean contract settled RMB21 lower, or 0.5%, at RMB3,938 a metric tonne.

 

Benchmark crude palm oil futures on Malaysia's derivatives exchange ended a tad lower Tuesday, unable to break through the resistance of MYR3,400 a metric tonne despite a strike by Indonesian port workers, instead taking cues from Monday's weakness in soybean oil prices and market estimates of record high month-end inventories of around 2.0 million metric tonnes in March. The benchmark June contract on Bursa Malaysia Derivatives ended MYR7 lower at MYR3,375/tonne after reaching 8-day highs in early trade.

 

In other news, Argentina's embattled economy minister, Martin Lousteau, is ready to offer concessions to protesting farmers in talks this week, but people close to him insist he has no plans to reverse the soy tax increase that prompted a destructive three-week strike last month.

 

Argentina's oilseed industry held soybean stocks totaling 566,603 metric tonnes as of March 1, down 54% from the 1,218,516 held at the same date in 2007, according to the Agriculture Secretariat's latest data. Soyoil stocks totaled 182,036 tonnes as of March 1, down from 255,794 tonnes held at the same date a year earlier. Stocks of soy pellets totaled 523,683 tonnes, up from 389,311 tonnes a year earlier.