April 14, 2009

 

CBOT Soy Outlook on Tuesday: Up 5-9 cents; market fundamentals support prices

 

 

Chicago Board of Trade soybean futures are poised for a firmer start to Tuesday's day session, fueled by bullish market fundamentals.

 

CBOT soybean futures are called to open 5 cents to 9 cents higher.

 

Continued strong export demand from China in the face of tight old crop U.S. soybean stocks is expected to keep nearby, old crop futures underpinned, said Vic Lespinasse, analyst with Grainsanalyst.com.

 

Weather forecasts calling for much drier conditions in the Midwest next week that should allow corn plantings to pick up is a bullish feature for new crop futures as well, Lespinasse said. The faster corn plantings progress, the less chance there is for acreage switching from corn to soybeans, he added.

 

However, a downturn is outside stock indexes and crude oil futures and a firmer U.S. dollar index are seen as bearish inputs limiting upside potential.

 

A technical analyst said soybean bulls have the near-term technical advantage, with prices in a six-week-old uptrend on the daily bar chart. The next upside price objective for May soybeans is to push and close prices above solid technical resistance at the January high of US$10.69 a bushel. The next downside price objective is pushing and closing prices below solid technical support at US$9.80 a bushel.

 

The DTN Meteorlogix weather forecast said wet weather over southern and eastern areas of the U.S. Midwest along with cool temperatures continue to limit fieldwork. Warmer and drier weather will develop during the next few days before rain returns over the weekend. Drier conditions are on tap in the western Midwest next week, but some unsettled weather may continue in the east along with cool temperatures.

 

The National Oilseed Processors Association says 137.3 million bushels of soybeans were crushed in March, up from 128.7 million in February, just below the average analyst estimate of 138.4 million. The range of pre-report estimates was 137 million to 141 million. Soyoil stocks were pegged at 2.593 billion pounds, up from 2.501 billion in February, and above the average analyst estimate of 2.566 billion. The range of estimates was 2.538 billion pounds to 2.610 billion pounds.

 

The increase in soyoil stocks is seen as a bearish feature, but strong world vegoil demand, with tight palm oil stocks, is expected to lend support to soyoil futures to start Tuesday's day session analysts said.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday, tracking the gains of their counterparts on CBOT Monday.

 

Meanwhile, China's soybean imports may exceed 40 million metric tonnes for the first time in 2009 as processors turn to cheaper imports rather than compete for local soybeans with the government, which has been paying higher-than-market prices, analysts said Tuesday.

 

Crude palm oil futures on Malaysia's derivatives exchange rose sharply Tuesday on speculative buying spurred by expectations the current tightness in stocks will continue as April 1-15 palm oil exports are expected to be higher on month, said trade participants.