May 15, 2007

 

CBOT Soy Outlook on Tuesday: Down 3-5 cents; planting progress featured

 

 

Chicago Board of Trade soybean futures are expected to start Tuesday's day session lower, influenced by a solid planting pace reported across the central U.S. crop belt.

 

CBOT soybean futures are called to start the session 3 to 5 cents lower.

 

In overnight e-CBOT trading, July soybeans slipped 4 1/2 cents to US$7.66 per bushel, and November dropped 4 1/2 cents to US$7.95.

 

Planting progress will take some edge off prices to start the day, with traders taking some profits off the table following the U.S. Department of Agriculture's planting progress report.

 

Soybean plantings were slightly above expectations, and analysts expect the trade to take a bearish approach following recent price strength. The planting pace is taking some fears out of the market, with seedings moving at a normal pace and favorable planting conditions lying ahead after a Midwest rain system clears out at midweek, analysts added.

 

USDA reported 32% of the crop was reported planted as of May 13, slightly higher than the 31% planted last year and the five-year average of 31%. In Illinois, 44% of the crop has been planted, above the 29% seeded in 2006 and the five-year average of 32%. One western U.S. Midwest state that reported above-average seedings was Minnesota, which reported 45% of the soybean crop planted, well above the 19% planted last year at this time and the five-year average of 32%. In Iowa 24% of the crop was planted, behind the five year average of 37%.

 

Nationally, 6% of the crop has emerged, compared to 8% last year and the five-year average of 8%.

 

However, "bean plantings still have a long way to go to finish plantings, and traders won't let their guards down," said a CBOT commission house broker. 2007-08 ending stocks are seen down sharply from 2006-07 and that still leaves little room for error, particularly with almost 70% of the crop still to be planted and a long growing season still ahead, he added.

 

A technical analyst said soybean prices have seen a bullish upside breakout from a sideways trading range on the daily bar chart. A 2.5-month-old downtrend on the daily bar chart has been negated. Soybean bulls would regain better upside technical momentum by producing a close above solid chart resistance at US$7.80 basis July futures. The next downside price objective is closing prices below solid support at US$7.50.

 

First resistance for July soybeans is seen at Monday's high of US$7.76 and then at US$7.80. First support is seen at Monday's low of US$7.63 and then at US$7.60.

 

The DTN Meteorlogix Weather Service forecast said rainfall over Nebraska, parts of Iowa and Missouri may slow planting progress for a few days in the western Midwest before it dries out again. Soil moisture favors early growth, except eastern Minnesota may be turning too dry. In the eastern Midwest, showers Tuesday may cause planting slowdowns but nothing major is expected. Soil moisture will favor early growth at this time, but the region may be trending drier, Meteorlogix reported.

 

Deliveries posted against the CBOT May soy future reached 175 contracts. Large issuers included the customer account of Man Professional Clearing, which issued 109 contracts and the house account of Term Commodities stopping 58 contracts. The last trade assigned was May 14.

 

In other news, China's soybean imports in April totaled 2.65 million metric tonnes, the General Administration of Customs said Tuesday. In the first four months, soybean imports totaled 8.37 million tonnes, up 4.9% from a year earlier, according to preliminary data provided by the Customs.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly lower Tuesday, subject to a correction after their recent surge. The benchmark September 2007 contract settled RMB2 lower at RMB3,209 a metric tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Tuesday in what traders described as a correction after bearish export data damped the recent bullish market sentiment. The benchmark July contract ended at MYR2,346 a metric tonne, down MYR43, but well above the key technical resistance point at MYR2,300/tonne.