June 2, 2009

 

CBOT Soy Outlook on Tuesday: Down 3-5 cents as market takes a pause

 

 

Chicago Board of Trade soybeans are expected to open lower Tuesday amid profit-taking following Monday's strong gains, analysts said.

 

Soybeans are called 3 to 5 cents lower. In overnight trade, July soybeans were down 3 3/4 cents to US$12.14 3/4 per bushel and December soybeans were down 5 1/2 cents to US$10.80 1/2.

 

July soyoil was down 23 points to 40.22 cents per pound and July soymeal was down US$0.60 to US$390.20 per short tonne.

 

The grains and oilseeds were "taking a breather" overnight after Monday's gains, Barclays Capital said in a daily briefing, which were fueled mostly by outside macro markets. A weaker dollar and stronger equities have supported the complex recently.

 

"There were some excesses yesterday [Monday], so we'll go back a little bit," a floor analyst said.

 

Soybeans still have fundamental support from strong Chinese imports and a tight old crop supply situation due in part to the poor crop in Argentina, analysts say.

 

U.S. crop concerns are also providing underlying support, according to some analysts.

 

Soybean planting was 66% complete as of Sunday, compared to 67% last year and the average of 79%, the U.S. Department of Agriculture said in its crop progress report Monday. That was toward the low end of trade expectations, which ranged from 65% to 75%. A week ago, 48% of the crop was planted.

 

"Money flow will continue to drive the market direction for at least another day but [Monday's] crop progress report will offer additional underlying support to a market that is already bullish on supply concerns," Benson Quinn Commodities analyst Kim Rugel said in a market commentary.

 

Weather forecasts call for scattered showers and thundershowers in the northern half of the Midwest Tuesday, with scattered showers and thunderstorms in central and southern areas on Wednesday. Another rain system is expected on the weekend into early next week.

 

In other news, the drought in China's major soybean-producing Heilongjiang province continues to threaten crop development there, with more that 45% of the cultivated land affected, the Office of State Flood Control and Drought Relief Headquarters said Tuesday.

 

The next upside price objective is to push and close prices above solid technical resistance at US$13.00 a bushel, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid support at last week's low of US$11.51 a bushel.

 

First resistance for July soybeans is seen at Monday's high of US$12.27 and then at US$12.50, the technical analyst said. First support is seen at US$12.00 and then at Monday's low of US$11.85 3/4.

 

In international markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday, in tandem with gains at the Chicago Board of Trade overnight and supported by the external markets.

 

The benchmark January 2010 soybean contract settled RMB12 a metric tonne, or 0.3%, higher at RMB3,757/tonne.

 

Also, crude palm oil futures on Malaysia's derivatives exchange ended lower in volatile trade Tuesday on profit-taking, estimates of a rise in production and spillover pressure from soybean oil, said trade participants.

 

The benchmark August contract on the Bursa Malaysia Derivatives ended MYR27 lower at MYR2,798 a metric tonne after trading between MYR2,586 and MYR2,651.