May 13, 2008

 

CBOT Soy Outlook on Tuesday: Up 4-6 cents; supportive demand, planting outlooks

 

 

Soybean futures at the Chicago Board of Trade is seen starting Tuesday's day session firmer, rising on bullish underlying fundamentals amid supportive planting and demand outlooks.

 

CBOT soybean futures are called to start the session 4 to 6 cents higher. In overnight electronic trading, July soybeans were 5 1/2 cents higher at US$13.48, November soybeans were 7 3/4 cents higher at US$12.97. July soyoil was 7 points higher at 61.35 cents per pound and July soymeal was US$1.00 higher US$339.50 per short tonne.

 

Underlying support from tight projected old and new crop ending stocks in conjunction with lingering worries that unresolved strike issues in Argentina could send additional export business to U.S. continues to buoy prices, analysts said.

 

A slow soybean planting pace coupled with ideas favorable weather conditions for a pick-up in corn seeding progress will limit acreage switching from corn to soybeans is seen aiding the higher tone as well, analysts added.

 

However, bearish outside influences, with a firmer U.S. dollar, weaker crude oil prices and declines in gold and silver futures are expected to limit upside potential, traders said.

 

Meanwhile, a technical analyst said prices are trapped in a big sideways trading range between the April high of US$14.15 and the May low of US$12.44 basis the July contract. The next downside price objective for July soybeans is pushing and closing prices below solid technical support at US$13.20, which would fill on the downside last Friday's upside price gap. The next upside price objective is to push and close prices above solid technical resistance at Monday's high of US$13.74 a bushel.

 

First support for July soybeans is seen at Monday's low of US$13.39 and then at US$13.30. First resistance is seen at US$13.50 and then at Monday's high of US$13.74.

 

U.S. Department of Agriculture said 11% of the soybean crop was planted, up from 5% last week but down from the average of 29%. Traders had expected 10% to 16% of the crop to be planted.

 

In Iowa, 4% of the crop was planted, compared to the average of 29%. Illinois' crop was 7% planted, down from the average of 32%, and Indiana's crop was 19% planted, down from the average of 35%.

 

It should not be surprising that soybean planting is behind average because corn planting is behind average, John Kleist, broker/analyst at Allendale Inc. told Dow Jones Newswires said. They are seeded in many of the same areas, he added.

 

In deliveries, May soybean deliveries totaled 467 lots. The house account at Term Commodities issued 90 lots, and a customer account at RJ O'Brien issued 375 lots. Stoppers were scattered among various commission houses. The last trade date assigned was May 12.

 

In other news, India's state-run trading company PEC Ltd. has bought 24,000 metric tonnes of crude soyoil in a tender floated last week, a senior company official said Tuesday. A trade official who took part in the bidding process said that the soyoil will be sourced from China.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Tuesday due to a limited supply of domestic soybeans. The benchmark January 2009 soybean contracts settled RMB50 higher at RMB4,461 a metric tonne, or up 1.13%, after trading between RMB4,421-4,506/tonne.