May 6, 2008

 

CBOT Soy Outlook on Tuesday: Up 10-12 cents; in tune with overnight theme

 

 

Soybean futures on the Chicago Board of Trade are expected to start Tuesday's day session firm, in tune with overnight trade, garnering support from the U.S. dollar and market uncertainties.

 

CBOT soybean futures are called to start the session 10 to 12 cents higher.

 

In overnight electronic trading, July soybeans were 12 cents higher at US$12.98, November soybeans were 11 1/2 cents higher at US$12.27. July soyoil was 48 points higher at 57.85 cents per pound and July soymeal was US$3.50 higher US$334.50 per short tonne.

 

The combination of weakness in the U.S. dollar, uncertainty tied to Argentina exports and lingering concerns about eventual U.S. acreage amid slow planting progress in the Midwest is seen supporting prices in early trade, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

However, trade positioning ahead of Friday's supply and demand reports and talk of the market looking a little heavy on technical charts is expected to keep a lid on advances in the absence of any fresh market moving inputs, traders said.

 

The market will keep a close eye on developments in ongoing strike negotiations with the Argentina government and farm groups, traders added.

 

Leaders of Argentina's leading agricultural unions vowed to keep the roads clear despite the strike ahead of a meeting with the government on Tuesday, but members were advised to refuse to sell any grain for export. The groups vow to take a harder line Wednesday if the government of President Cristina Fernandez doesn't back off a new sliding-scale grain export tax, which was imposed in March. The tax sharply raised the duty on soybean shipments.

 

Meanwhile, a technical analyst said the next downside price objective for July soybeans is pushing and closing prices below solid technical support at last week's low of US$12.44. The next upside price objective is to push and close prices above solid technical resistance at US$13.50 a bushel.

 

First support for July soybeans is seen at Monday's low of US$12.81 and then at US$12.65. First resistance is seen at 13.00 and then at Monday's high of US$13.12.

 

U.S. soybean planting was 5% complete as of Sunday, below the average of 14%, according to U.S. Department of Agriculture. Analysts' expectations were for 7% to 9% complete. No soybean plantings were reported across the key growing states of Illinois, Iowa, Indiana, and Minnesota.

 

In deliveries, May soybean deliveries totaled 4 lots. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was April 22.

 

In other news, Egypt's state-owned Food Industries Holding Co. is tendering to buy 20,000-25,000 metric tonnes of soybean oil, traders said Tuesday. FIHC is looking to purchase the oil for shipment during the second half of June, a Cairo-based trader said.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled mostly higher Tuesday, supported by concurrent gains of counterparts during electronic trading at CBOT. The benchmark January 2009 soybean contract settled up RMB46, or 1.1%, at RMB4,145 a metric tonne after trading between RMB4,083-4,182/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended slightly lower Tuesday, giving up small early gains in sluggish range-bound trade trying to adjust the spread with soybean oil prices, said trade participants. The benchmark July contract on Bursa Malaysia Derivatives ended at MYR3,340-MYR3,395 a metric tonne for the fifth successive trading day.