May 1, 2007

 

CBOT Soy Outlook on Tuesday: Down 1-2 cents; following overnight theme

 

 

Soybean futures on the Chicago Board of Trade are expected to start Tuesday's day session on the defensive, influenced by the overnight theme and light pressure from a slower-than-expected corn planting pace.

 

In e-CBOT trade, May was 1 1/2-cent lower at US$7.27, July was 1-cent lower at US$7.42, and November soybeans were 3/4-cent lower at US$7.70.

 

CBOT soybean futures are called to start the session 1 to 2 cents lower.

 

A slower-than-expected planting pace reported in Monday's crop progress report rekindled ideas of corn acreage shifts to soybean, and should apply pressure to prices, analysts said.

 

Trade consolidation from Monday's spread unwinding gains and bearish old crop supply side fundamentals should generate light pressure as well, analysts added.

 

However, favorable planting outlooks for the remainder of the week in the Midwest, and ideas the market has established a near term bottom on technical charts is expected to limit declines and attract buyers, a CBOT floor analyst said.

 

Meanwhile, a market technician said soybean bulls need to show more power soon, with a two-month-old downtrend line still in place on the daily July bar chart. Soybean bulls would regain some better upside technical momentum by producing a close above solid chart resistance at Monday's high of US$7.51 basis the July contract. The next downside price objective is closing prices below solid support at the April low of US$7.25 1/2.

 

First resistance for July soybeans is seen at Monday's high of US$7.51 and then at US$7.55. First support is seen at US$7.40 and then at Monday's low of US$7.34 1/2.

 

U.S. Department of Agriculture reported Monday in its weekly crop progress report, U.S. soybean plantings at 3% complete. The figure lags behind last year's pace of 9% and the five-year average of 7%.

 

Although soybean planting is behind last year's pace it is "no big surprise, with corn planting late," said Bill Nelson associate vice president with A.G. Edwards and Sons in St. Louis, Mo. Soybean planting "plays second fiddle" to corn planting and farmers need to have more corn planted before soybean planting increases, he said.

 

The DTN Meteorlogix Weather Service forecast said planting conditions in the western Midwest should improve this week after recent hot temperatures and since mainly dry weather should last through at least Saturday and possibly through Monday. In the eastern Midwest, improving conditions for field work and planting this week, despite a few light showers in the area. The exception to this is in the south where it may be somewhat wetter for a time.

 

Deliveries posted against May soybean futures were 1,081 contracts Tuesday. Large issuers included customer accounts of Prudential Bache which issued 287 contracts and the customer account at the Bear, Sterns Securities Corp. with 243 lots. Stoppers were scattered with house account at ADM Investor Services the primary stopper with 492 lots. The last trade assigned was April 30.

 

In other news, India on Tuesday left the base import prices of soy oil and palm oils unchanged at current levels to keep a check on local prices and inflation. In India, import tariffs for palm oils and soyoil are calculated from base import prices, regardless of the actual price at which importers buy the commodities.

 

In overseas markets, Chinese soy futures markets are closed until May 8, in observance of the Labor Day holiday, and Malaysian Palm Oil futures markets are closed Tuesday and Wednesday in observance of national holidays.