May 27, 2008
 

CBOT Soy Outlook on Tuesday: Up 17-20 cents; Argentine strife, outside support

 
 

Soybean futures on the Chicago Board of Trade are expected to start Tuesday's day session higher, bolstered by lingering strife between the Argentine government and farmers as well as outside market influences.

 

CBOT soybean futures are called to start the session 17 to 20 cents higher. In overnight electronic trading, July soybeans were 20 cents higher at US$13.88, November soybeans were 19 1/4 cents higher at US$13.72 3/4. July soyoil was 124 points higher at 64.80 cents per pound and July soymeal was US$2.40 higher US$339.00 per short tonne.

 

The dominant issue seen underpinning prices is the Argentine government's reluctance to negotiate with Argentina farm groups, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The Argentina issue is seen keeping U.S. export demand thriving, and based on already tight projected ending stocks, the market is expected to rally prices to ration demand, Roose added.

 

A weaker U.S. dollar, higher energy markets in general, and world ocean freight rates near record levels are seen lending price support as well, analysts said.

 

A technical analyst said the next downside price objective for July soybeans is pushing and closing prices below solid technical support at last week's low of US$13.13. The next upside price objective is to push and close prices above solid technical resistance at the May high of US$14.02 a bushel.

 

First support for July soybeans is seen at US$13.50 and then at Friday's low of US$13.41. First resistance is seen Friday's and last week's high of at US$13.71 and then at US$13.87.

 

Meanwhile, the Argentine government cancelled renewed negotiations slated for Monday night with Argentine farm leaders upset with grain export taxes, Interior Minister Alberto Fernandez said.

 

The news, which is expected to lead to more farmer protests, came a day after the government and farm groups held competing rallies. Farm leaders, at their much larger rally in the city of Rosario, were especially critical of President Cristina Fernandez's administration and threatened to renew strikes if the government didn't meet their demands during talks that had been slated for Monday evening.

 

The U.S. Department of Agriculture announced Tuesday private export sales of 165,000 metric tonnes of soybeans for delivery to unknown destinations in the 2008-09 marketing year.

 

On tap for Tuesday, USDA is scheduled to release its weekly export inspections report at 11 a.m. EDT and its weekly crop progress report at 4:00 p.m. EDT.

 

Index funds increased their net long CBOT soybean futures and options positions combined, which now totals 166,136 contracts as of May 20, down from 170,835 the prior week, according to Commodity Futures Trading Commission, as reported Friday in its supplemental commitment of traders report. Traditional large speculative traders were net long 86,936 contracts compared with net longs of 82,705 in the previous week. Commercials held net short combined futures and options positions totaling 218,524 contracts, up from the previous week's 221,624 contracts.

 

In overseas markets, China's soyoil futures traded on the Dalian Commodity Exchange rose the most Tuesday, boosted by gains in rapeseed oil prices. The benchmark September 2008 soyoil contract increased RMB294, or 2.6%, to RMB11,458 a metric tonne. Soybean prices were mostly higher, with the benchmark January 2009 soybean contract settling RMB19 higher at RMB4,607/tonne, or up 0.4%.

 

Crude palm oil futures on Malaysia's derivatives exchange ended 1.6% higher Tuesday, at a fresh 10-week high on speculative buying amid strong soybean oil and crude oil prices, trade participants said. The benchmark August contract on the Bursa Malaysia Derivatives ended MYR57 higher at MYR3,730 a metric tonne after reaching a high of MYR3,737.