May 20, 2008

 

CBOT Soy Outlook on Tuesday: Up 3-5 cents; stabilizing after Monday's slide

 

 

Soybean futures on the Chicago Board of Trade are seen beginning Tuesday's day session on firm footing, in step with the overnight theme, as the market looks to stabilize after Monday's slide, analysts said.

 

CBOT soybean futures are called to start the session 3 to 5 cents higher. In overnight electronic trading, July soybeans were 5 cents higher at US$13.38, November soybeans were 1 3/4 cents higher at US$13.23 1/2. July soyoil was 20 points higher at 60.40 cents per pound and July soymeal was US$0.50 lower US$338.30 per short tonne.

 

The market is poised to find some stability after recent declines, settling into a sideways pattern as news of the suspension of the Argentina farmer's strike and below average Midwest plantings are already factored into prices, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

Supportive outside market influences, with a weaker U.S. dollar and firm crude oil and metal futures, are seen lending strength to prices, analysts said. Meanwhile, spillover support from higher expected openings in corn and wheat is seen aiding the higher start as well, traders added.

 

A technical analyst said the next downside price objective for July soybeans is pushing and closing prices below solid technical support at US$13.00. The next upside price objective is to push and close prices above solid technical resistance at US$13.66 a bushel, which would fill on the upside Monday's downside price gap on the daily chart.

 

First support for July soybeans is seen at Monday's low of US$13.22 and then at last week's low of US$13.12. First resistance is seen at Monday's high of US$13.55 and then at US$13.66.

 

Argentina's farmers will lift a nationwide strike Wednesday to facilitate negotiations with the government over a divisive export tax on grains, farm leaders announced late Monday.

 

Farmers have been on strike since May 8 to protest the tax. The government has refused to meet with farm group leaders until they suspend the strike, but farmers had been hesitant to suspend the strike until the government made some concessions.

 

U.S. Department of Agriculture said 27% of the soybean crop was planted as of Sunday, up from 11% last week, but well off the average of 47%. Traders had expected 25% to 35% of the crop to be planted.

 

The two top soybean-producing states are behind in average planting progress. Illinois continued to lag as 15% of the crop was planted, compared to the average of 53%. In Iowa, 34% of the crop was planted, up from 4% the previous week and down from the average of 53%.

 

In other news, farmers can expect to harvest 2.3% less soy in the 2007-08 season than was estimated in March, according to farm consultancy AgRural. The newest estimate calls for a 61.581-million-tonne harvest, down from the previous forecast of 63.003 million tonnes.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Tuesday, following a decline in prices on CBOT Monday. The benchmark January 2009 soybean contract settled RMB52 lower at RMB4,453 a metric tonne, or down 1.15%, after trading between RMB4,426 and RMB4,489/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower but off lows in thin trade Tuesday amid exports remaining below expectations, a fall in soybean oil prices and Argentina farmers planning to suspend their strike protesting an export tax hike, said trade participants. The benchmark August CPO futures contract on the Bursa Malaysia Derivatives ended MYR16 lower at MYR3,554 a metric tonne.