May 27, 2009

 

CBOT Soy Outlook on Wednesday: Up 8-10 cents; fundamentals support buoys

 

 

Soybean futures at the Chicago Board of Trade are poised for a firm start to Wednesday's day session, taking its cue from overnight trade, with old crop fundamentals keeping a bullish focus in the market.

 

CBOT soybean futures are seen opening 8 cents to 10 cents higher, with soy product futures following overnight price action.

 

Speculative buying has returned, and without any pressure from outside markets the scenario of tight stocks and strong demand will continue to underpin prices, said Vic Lespinasse, analyst with Grainsanalyst.com.

 

Technically, the market remains strong, and with the bounce in the July/November bull spread Tuesday providing bullish signals, sellers will remain cautious, Lespinasse added.

 

The July/November bull spread settled at US$1.43 a bushel on Tuesday, up from Friday's settlement of US$1.34 1/2 cents.

 

A technical analyst said first resistance for July soybeans is seen at last week's high of US$11.87 1/2 and then at US$12.00. First support is seen at US$11.75 and then at US$11.64.

 

Planting progress reported by U.S. Department of Agriculture were in line with trade estimates, but lagging progress in the eastern Midwest provides some uncertainty that is expected to keep traders adding premium to new crop futures as well.

 

The USDA said 48% of the soybean crop was planted, up from 25% the prior week but down from the five-year average of 65%. Analysts had expected progress of 45% to 50%.

 

Indiana and Illinois remain far behind schedule. Illinois had planted 12% of the crop, up from 1% last week but down from the average of 69%. Indiana had planted 25%, up from 6% the prior week but down from the average of 64%.

 

"I think it's supportive, but I don't think the trade's going to get too excited yet about soybeans," said Arlan Suderman, analyst at Farm Futures.

 

DTN Meteorlogix Weather said showers in the Midwest this week may continue to slow planting progress, but showers in the western Midwest favor earlier planted crops.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday, tracking a rise on CBOT Tuesday and supported by an ongoing drought in local producing areas. Crude palm oil futures on Malaysia's derivatives exchange ended 3% higher Wednesday, recovering most of the previous two days' losses, on speculative short covering, trading participants said.