May 2, 2006

 

CBOT Soy Outlook on Tuesday: Down 1-2 cents; record planting pace, e-CBOT

 

 

Soybean futures on the Chicago Board of Trade are expected to start Tuesday's session lower, following the overnight theme as the market embraces a record start to the 2006 U.S. planting pace.

 

Analysts expect soybeans to open 1 to 2 cents per bushel lower.

 

In overnight electronic trade, July soybeans were 1 cent lower at US$6.05 3/4, July soymeal was unchanged at US$179.00 and July soyoil was 13 points lower at 25.75 cents per pound.

 

The record pace of early soybean plantings is seen weighing on prices to start the session, with bearish supply side fundamentals expected to limit upside movement, analysts said.

 

The U.S. Department of Agriculture reported 10% of the U.S. soybean crop planted as of Sunday. The pace of seedings is ahead of last year's 8% and the five-year average of 7%. The top U.S. producing states of Illinois and Iowa reported plantings at 5% and 6% complete, compared with their respective five-year averages of 5% and 3%.

 

However, the influence of higher outside inflationary markets continues to keep speculative interest dictating price direction, as the market remains comfortable ignoring fundamental outlooks, traders add.

 

Nevertheless, the inability of futures to challenge Friday's highs in Monday's session was seen taking some wind out of bullish sails, but with metals and energies higher again Tuesday an influx of speculative buying could reignite short covering interest to generate volatile price action, said a CBOT commission house broker.

 

Technical analysts say recent price action suggests that a major low is in place and that there is more upside price potential in the market, but it will take a close above-solid resistance at last Friday's high of US$6.14 to provide better upside technical momentum. A close below the upside gap on Friday - meaning below US$5.91 - would provide fresh downside technical momentum.

 

First resistance for July soybeans is seen at US$6.10 and then at US$6.14. First support is seen at US$6.03 - Monday's low-and then at US$5.98 - the top of the upside price gap.

 

U.S. Midwest cash soybean basis bids are unchanged to mixed Tuesday, cash dealers said. Spot cash soybean bids were up 2 cents in Peoria, Ill., up 4 cents Evansville, Ind., and down 1 cent in St. Louis, Mo., according to cash sources Tuesday.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said dry conditions are on tap for the western Midwest Tuesday and early Wednesday, before showers move through the southern portion of the western Midwest later Wednesday and during Thursday.

 

In the eastern Midwest, episodes of scattered showers and thundershowers will occur during a three-day period from the southern portion of the eastern Midwest through the northern portion of the Delta. Rainfall within this region should average 0.50-1.50 inches during this period. The balance of the region should see mostly light showers during this time, Meteorlogix said.

 

In deliveries, a total of 998 delivery notices were posted against the CBOT May soybean contract. A customer account at Kottke issued 491 lots while the house account at Term Commodities was the principal stopper of 362 lots. The last trade date assigned was May 1. A total of 309 delivery notices were posted against May soyoil, with the house account at ADM Investor Services stopping all 309 lots. The last trade date assigned was April 27.

 

Rotterdam soybeans and soymeal prices were higher, and European vegoils were mixed.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended lower Tuesday amid a rising Malaysian ringgit and keen selling interest from a large trading house in the cash market. The benchmark July CPO contract ended at MYR1,465 a metric tonne, down MYR16 from Friday after moving between MYR1,464 and MYR1,484/tonne.