May 19, 2009

 

CBOT Soy Outlook on Tuesday: Up; extending uptrend on bullish fundamentals

 

 

Soybean futures on the Chicago Board of Trade are poised for a higher start to Tuesday's day session, extending the overnight theme on bullish fundamentals.

 

CBOT soybean futures are seen opening 10 cents to 12 cents higher, with soy product futures following overnight price action.

 

The market continues to draw support from tightening old crop supply concerns, with strong export demand buoying old crop contracts, analysts said.

 

A weaker U.S. dollar is expected to aide the bullish tone, with speculative buyers continuing to emerge on price breaks, analysts said. However, traders remain on guard for profit taking to surface as prices extend to new highs for 2-month rally.

 

A technical analyst said the next upside price objective for July soybeans is to push and close prices above psychological resistance at US$12.00 a bushel. The next downside price objective is pushing and closing prices below solid support at the April high of US$10.64 1/2 a bushel.

 

New crop futures are expected to garner support from forecasts for a return of rains to the Midwest next week. "The return of the rains would affect soybean plantings in the eastern Midwest, said Tim Hannagan, analyst with Alaron Trading in Chicago. "Farmers will aggressively push their corn plantings before this week's window of opportunity closes, leaving soybeans at the mercy of weather next week," he added.

 

DTN Meteorlogix Weather said mostly dry weather is forecast for the eastern Midwest through Sunday. Scattered showers and thunderstorms will develop in the western Midwest later this week and the eastern Midwest early next week. Rainfall will favor corn and soybeans which are planted in the western Midwest but will again disrupt and delay corn and soybean planting in the Eastern Midwest where planting progress is currently running well behind normal.

 

U.S. Department of Agriculture said 25% of the soybean crop was planted as of Sunday, up 11 percentage points from last week, but below the five-year average of 44%. Last year the crop was 25% planted. The trade had expected planting progress to be between 22% and 30%.

 

The major producing states of the eastern Midwest showed limited planting progress as of Sunday. Illinois was 1% planted compared to its five-year average of 50%, and Indiana was 6% planted, below the average of 49%.

 

Overall the planting pace was right on target with market expectations, and the trade will be watching for what gets accomplished with weather clearing out in the eastern Midwest this week, said Jason Roose, analyst with U.S. Commodities in West Des Moines, Iowa.

 

In overseas markets, soybean futures ended higher Tuesday on the Dalian Commodity Exchange, buoyed by external markets along with the rest of the commodities complex. Crude palm oil futures on Malaysia's derivatives exchange ended higher Tuesday, tracking stronger soyoil and crude oil futures, said trade participants.