June 9, 2009

 

CBOT Soy Outlook on Tuesday: Seen up; overnight theme, outside markets

 

 

Chicago Board of Trade soybean futures are poised for a higher start to Tuesday's day session, in tune with the overnight theme amid support from outside markets.

 

CBOT soybean futures are seen opening 5 cents to 10 cents higher, with soy product futures following overnight price action.

 

Weakness in the U.S. dollar, higher crude oil and equities are expected to serve as the catalyst to attract buyers in early trade, analysts said.

 

A quiet news front will keep outside influences in play, with underlying support seen from traders positioning themselves ahead of an expected bullish supply and demand report Wednesday, analysts said.

 

The U.S. Department of Agriculture will release June supply and demand tables Wednesday at 8:30 a.m. EDT (1230 GMT). The average of analysts' estimates peg 2008-09 U.S. soybean ending stocks at 114 million bushels, and 2009-10 marketing year ending stocks at 211 million bushels.

 

Otherwise, strong technical momentum in old crop contracts coupled with tight availability of 2008-09 supplies is expected to support nearby contracts and bull spreads. Meanwhile, an advancing planting pace and outlooks for soybean acres to increase on delayed seedings in corn and spring wheat is expected to support bull spreads as well.

 

A technical analyst said first resistance for July soybeans is seen at Monday's high of US$12.39 3/4 and then at US$12.50. First support is seen at US$12.25 and then at Monday's low of US$12.16.

 

DTN Meteorlogix Weather said moderate to heavy rain and thunderstorms through southern and eastern areas of the Midwest during the next few days will likely keep field work and planting slow, especially for the soybean crop.

 

Soybean planting was 78% complete as of Sunday, compared to 76% last year and the five-year average of 87%, the USDA said. That was toward the low end of trade expectations, which ranged from 77% to 83%. A week ago, 66% of the crop was planted.

 

States like Illinois and Indiana continued to lag behind in planting progress this season. Illinois was 59% planted, compared to 65% last year and the average of 88%, while Indiana was 69% planted, compared to 71% last year and the average of 87%, the USDA said. Iowa plantings were near completion. The crop was 95% seeded, up from 85% last year and the average of 95%.

 

The plantings numbers don't mean that much at this point, as the seedings aren't terribly behind, said Dale Durchholz, analyst with Agrivisor in Bloomington, Ill. Weather is more important to watch, if rains stay farther north in the Midwest, the wettest areas of Illinois and Indiana will rapidly move along in their seedings, Durchholz said.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Tuesday as supply concerns weighed on the market even as counterparts at the CBOT held firm. The benchmark Jan 2010 soybean contract settled RMB36 a metric tonne, or 1.0%, lower at RMB3,698/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher Tuesday, tracking stronger soybean oil and crude oil futures in after-hours trade, but speculation of weak exports capped gains, said trade participants. The benchmark August CPO contract on the Bursa Malaysia Derivatives endedMYR5 up at MYR2,465 a metric tonne.