May 9, 2006

 

CBOT Soy Outlook on Tuesday: Seen up; bouncing back from Monday

 

 

Soybean futures on the Chicago Board of Trade are seen starting Tuesday's session on firm footing, bouncing back from Monday's setback, with a slower than expected planting pace and supportive outside influences underpinning prices.

 

Analysts expect soybeans to open 6 to 8 cents per bushel higher.

 

In overnight electronic trade, July soybeans were 7 1/2 cents higher at US$6.07, July soymeal was US$2.30 higher at US$179.50 and July soyoil was 32 points higher at 25.24 cents per pound.

 

The market is poised for a modest bounce from Monday's declines, with a slower-than-expected planting pace reported in the U.S. Department of Agriculture's crop progress report providing some ammunition for bullish traders, with strength in metals and energy markets aiding the advances, analysts said.

 

The USDA on Monday reported that 18% of the U.S. soybean crop had been planted, compared to 24% last year and the five-year average of 19%. Analysts had expected plantings in the area of 25% complete. In Illinois, 14% of the crop had been planted, well below the 34% planted in 2005 and behind the five-year average of 22%.

 

The plantings number isn't alarming at this point, but with cool, wet conditions on tap near term, the market is poised to add back some risk premium, said a CBOT commission house broker. Nevertheless, any sign of upside exhaustion could quickly shift price direction, as burdensome inventories and sluggish export demand remain hindrances to upside movement, he added.

 

Meanwhile, market technicians said some minor chart damage occurred on Monday's price break and the market will need to fill Monday's downside price gap - meaning a move above US$6.05-basis July to repair the damage. It will take a close above solid resistance at last Friday's high of US$6.14 1/2 to provide fresh upside technical momentum. A close below support at US$5.91 would provide better downside technical momentum.

 

First resistance for July soybeans is seen at US$6.01 1/2 - Monday's high - and then at US$6.05. First support is seen at US$5.96 1/2 - Monday's low - and then at US$5.91.

 

U.S. Midwest cash soybean basis bids are mostly unchanged to higher Tuesday, cash dealers said. Spot cash soybean bids were up 2 cents in Peoria, Ill., up 3 cents in St Louis, Mo., and up 2 cents in Evansville, Ind., according to cash sources Tuesday.

 

The DTN Meteorlogix Weather Service forecast said light to moderate showers through northern and eastern areas of the western corn belt Tuesday, with a chance for additional light rain or drizzle Wednesday. Mainly dry conditions are scheduled for Thursday. Temperatures will average near to above normal Tuesday, near to below normal Wednesday, and below or much below normal Thursday.

 

In the eastern Midwest, scattered showers and possible thunderstorms are expected Tuesday and Wednesday, with a chance for sprinkles or light showers Thursday. Rainfall should average 0.25-1.00 inch and locally heavier, with the heaviest of the activity occurring through southern and eastern areas, Meteorlogix said.

 

The Taiwan Sugar Corp. is seeking 23,000 metric tonnes of corn and 12,000 tonnes of soybeans, both of U.S. origin for June-July delivery, in a tender Thursday, a trader in Taipei said.

 

In deliveries, a total of 1,206 delivery notices were posted against the CBOT May soybean contract. Issuers were scattered among various commission houses, with the Term Commodities a featured stopper of 132 lots. The last trade date assigned was May 8. A total of 325 delivery notices were posted against May soyoil. The last trade date assigned was May 8.

 

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

 

In overseas markets, soybean futures on China's Dalian Commodity Exchange settled mostly higher Tuesday on fresh buying, supported by gains in other local commodities futures, traders and analysts said. The benchmark September 2006 soybean contract settled RMB17 higher at RMB2,660 a metric tonne, after trading between RMB2,630/tonne and RMB2,689/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly lower Tuesday, dragged down by a combination of factors, including expectations of weaker exports and higher stocks. The benchmark July CPO contract ended at MYR1,450 a metric tonne, down MYR7 from Monday after moving between MYR1,447-MYR1,458/tonne.