April 28, 2009

 

CBOT Soy Outlook on Tuesday: 7-9 cents higher in corrective bounce

 

 

Chicago Board of Trade soybean futures are expected to open 7 cents to 9 cents a bushel higher Tuesday in a corrective bounce following Monday's sharp decline, traders said.

 

In overnight trading, May soybeans were up 9 3/4 cents to US$10.14 1/2 per bushel while November soybeans were up 7 3/4 cents to US$9.12 1/4.

 

May soymeal was up US$3.70 to US$317.70 per short tonne and May soyoil was up 2 points to 35.56 cents per pound.

 

The market's plunge Monday was based on overblown fears related to the spread of swine flu, as the trade worried about a possible reduction in feed demand, traders said. But the market still has strong demand from China and poor South American crops working in its favor, traders said.

 

"The underlying bullish fundamentals that have lifted beans to three month highs remain unchanged," Benson Quinn Commodities analyst Kim Rugel said in a commentary.

 

The U.S. Department of Agriculture's crop progress report Monday morning showed that planting was underway, with 3% of the crop planted as of Sunday, below the five-year average of 5%. Last year, 2% of the crop was planted. Traders had expected progress to be between 1% and 3%.

 

The trade continues to watch the pace of corn seedings for signs that acres could be shifting to beans, although that likely wouldn't happen for weeks yet, Farm Futures senior editor Bryce Knorr said in a morning commentary.

 

"A more immediate concern is the pace of Chinese buying," Knorr said. "Monday's export inspections fell to 6.9 million bushels, with nothing shipped out to China in the latest week."

 

Outside markets are weak, a trader said, with equities, crude oil and a stronger dollar likely to weigh. Still, the trader said the market was likely to have a "turnaround Tuesday" after Monday's losses.

 

A two-month-old price uptrend on the daily bar chart was negated Monday and chart damage was inflicted, a technical analyst said. The next upside price objective for the bean bulls is to push and close prices above solid technical resistance at US$10.40 a bushel. The next downside price objective for the bears is pushing and closing prices below solid chart support at US$9.50 a bushel.

 

First resistance for July soybeans is seen at US$10.05 1/4 and then at US$10.12, the technical analyst said. First support is seen at US$9.90 and then at Monday's low of US$9.75 1/4.

 

In other markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Tuesday, but the fall was contained as some traders sought bargain-hunting.

 

The benchmark January 2010 soybean contract settled RMB14 lower at RMB3,285 a metric tonne, or down 0.4%, compared with a 4% fall Monday.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower for the second consecutive day Tuesday on volatile trade amid uncertainties over upcoming demand for feed grains and oilseeds due to outbreak of swine flu, trade participants said.