May 5, 2009

 

CBOT Soy Outlook on Tuesday: Up 7-9 cents; bullish fundamentals underpin

 

 

Soybean futures at the Chicago Board of Trade are poised for a higher start to Tuesday's day session, as bullish fundamentals continue to drive upward momentum.

 

CBOT soybean futures are called to open 7 cents to 9 cents higher. CBOT soy product futures are seen mixed in tune with overnight action.

 

Tight old crop inventories, strong export demand from China and declining crop estimates for Argentina remain the catalysts supporting prices, analysts said.

 

A slow start to the 2009 planting season is another bullish feature keeping sellers on the defensive, with the absence of fresh bearish news providing no incentive for traders to stand in front of the bullish uptrend, analysts added.

 

The market is trading at seven-month and 2009 calendar year highs. However, traders remain on guard for profit taking to surface on any sign of upside exhaustion.

 

The bull spreads continue to work on old crop supply and demand features, with the July/November spread settling at a new high for the spread at US$1.33 a bushel Monday.

 

A technical analyst said the next upside price objective for July soybeans is to push and close prices above solid technical resistance at US$11.50 a bushel. The next downside price objective is pushing and closing prices below solid support at US$10.50 a bushel.

 

The DTN Meteorlogix weather forecast said warmer Midwest weather during the next few days will favor recently planted crops. However, unsettled and cooler weather after that slows crop development and spring field work, including planting.

 

U.S. Department of Agriculture said 6% of the U.S. soybean crop was planted, up from 3% last week and 5% last year. The five-year average is 11%, and the trade was expecting progress of between 6% and 10%.

 

Planting hasn't started in Illinois or Indiana, where the average progress is 8% and 13%, respectively.

 

In deliveries, May soybean deliveries totaled 24 lots. Customer accounts at Man Professional Clearing stopped 19 lots. The last trade date assigned was April 15.

 

May soyoil deliveries totaled 2,035 lots. Customer accounts at Man Professional Clearing issued and stopped 1,050 lots and 1,202 lots respectively. The house account at ADM Investor Services stopped 10 lots. The last trade date assigned was May 4.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Tuesday after a recent surge, taking cues from outside markets. Crude palm oil futures on Malaysia's derivatives exchange fell by as much as 3.7% Tuesday on long liquidation as investors rushed to take profits after a recent surge in prices.