June 3, 2008

 

CBOT Soy Outlook on Tuesday: Steady to firm; following overnight theme

 

 

Chicago Board of Trade soybean futures are seen starting Tuesday's day session steady to firm, following the overnight theme, with lingering Argentine strike issues and a slower-than-expected planting pace underpinning prices.

 

CBOT soybean futures are called to start the session steady to 3 cents higher. In overnight electronic trading, July soybeans were 2 cents higher at US$13.65 1/2, November soybeans were unchanged at US$13.58 1/2. July soyoil was 28 points lower at 61.42 cents per pound and July soymeal was US$0.03 higher US$343.30 per short tonne.

 

The lingering strike problems in Argentina should continue to underpin nearby contracts as export demand gets diverted to U.S. shores, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

Traders said the behind average planting pace was a supportive factor in overnight action.

 

However, soft outside inflationary markets and warmer temperatures forecasted for the Midwest, should mitigate support from wet conditions moving through the central U.S., Scoville added.

 

Meanwhile, traders are expected to take a cautious approach amid speculation the Commodity Futures Trading Commission will announce policy changes to address rising food costs, traders added.

 

A technical analyst said the next downside price objective for July soybeans is pushing and closing prices below psychological support at US$13.00. The next upside price objective is to push and close prices above psychological resistance at US$14.00 a bushel.

 

First support for July soybeans is seen at Monday's low of US$13.53 and then at US$13.40. First resistance is seen at US$13.75 and then at Monday's high of US$13.84 1/2.

 

U.S. Department of Agriculture said 69% of the U.S. soybean crop was planted, up from 52% last week but down from the five-year average of 81%. The overall pace of progress fell below trade expectations. Traders had expected anywhere from 70%-75% of the crop to be planted.

 

"They're trying to get the corn in the ground based on the high prices," said Joel Karlin, sales manager and commodity sales coordinator for Western Milling. "They haven't had time to switch the head on the combine to get soybeans planted."

 

Some of the major soy-producing states are very far behind, he said.

 

In Illinois, 57% of the soy crop was planted, compared to the average of 86%. In Iowa, 82% of the crop was planted, up from 72% last week but down from the average of 92%.

 

The USDA said 32% of the U.S. soybean crop was emerged, up from 12% last week but down from the average of 55%.

 

Argentina's farmers will extend a farm strike targeting grain exports until at least next Monday, farm leaders announced at a press conference Monday night.

 

However, farmers will resume sending cattle to the domestic market to avoid shortages. Argentines are the largest per capita beef consumers in the world, and surging meat prices risk turning the population against the striking farmers.

 

In overseas markets, China will end the export tax rebates on some vegetable oil including soyoil and palm oil, said the Ministry of Finance on Tuesday. The tax cancellation will be effective from June 13, said the ministry in a statement published on its Web site.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled slightly higher Tuesday tracking limited cash supply. The benchmark January 2009 soybean contract settled RMB8 higher at RMB4,503/tonne, or up 0.2%, after trading between RMB4,475/tonne and RMB4,543/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher with the market ignoring fundamentals that should result in a price decline, trade participants said. The benchmark August contract on the Bursa Malaysia Derivatives ended MYR21 higher at MYR3,530 a metric tonne, with the market trading in a narrow range of MYR3,509-MYR3,537/tonne.