June 23, 2009

 

CBOT Soy Outlook on Tuesday: Seen firm; oversold, outside market support

 

 

Soybean futures on the Chicago Board of Trade are poised for a firm start to Tuesday's day session, underpinned by technical buying and supportive outside market signals.

 

CBOT soybean futures are seen opening 10 cents to 12 cents higher.

 

"Technically oversold market conditions following recent declines coupled with commodity friendly outside markets in early trade are catalysts to attract buyers," said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

On the fundamental side, the fact that the market still has tight old crop inventories amid solid demand from the crush and exports remain underpinning features as well, Roose said.

 

A technical analyst said serious near-term chart damage has been inflicted in soybeans from Friday's bearish weekly low close and then strong follow-through selling pressure Monday.

 

First resistance for November soybeans is seen at US$10.00 and then at Monday's high of US$10.10. First support is seen at Monday's low of US$9.70 3/4 and then at US$9.60.

 

Meanwhile, 9% of U.S. soybean crops remain unplanted and with the southern Midwest and Delta counted on to plug the hole of short 2008-09 end stocks, seeding delays in those areas are enticing traders to keep some risk premium in prices, analysts said.

 

U.S. Department of Agriculture reported Monday, soybean plantings as of Sunday had advanced four percentage points to 91%, up from the 90% planted last year, but below the average of 95%. Traders estimated the percentage planted would be in the low 90s as rains prevented progress in such states as Illinois.

 

Producers "still have issues in the eastern corn belt," said Jerry Gidel, analyst for North America Risk Management Services. The crop was 79% planted in Illinois, behind the average of 96%, and 90% planted in Indiana, behind the average of 96%.

 

Soybeans were rated 67% good-to-excellent, up from 66% last week. Iowa's rating rose to 78% from 75% last week, while Illinois' rating fell to 52% from 53% last week. Indiana's rating dropped to 62% from 66% last week, the USDA said.

 

The crop was 84% emerged as of Sunday, up from 80% last year but down from the average of 90%. Planting and development delays raise concerns that harvest will be pushed back in the autumn, said Sid Love, analyst for Kropf & Love Consulting.

 

U.S. soybeans from the southern Midwest and the Delta historically are the first of the new crop to enter the cash market pipeline, but wet weather this year may delay their harvest and complicate the supply situation.

 

The possible lag is even more significant this year as soybean supplies from last year's crop are extremely tight, causing problems for processors and exporters.

 

DTN Meteorlogix said soybeans will benefit from warmer to hotter temperatures and periodic thundershower activity this week. This may also be a better weather pattern for the final planting effort for soybeans, Meteorlogix said.

 

In other news, China's Ministry of Commerce revised downward its estimate of soybean imports in June to 4.34 million metric tonnes from 4.617 million tonnes, a report on the ministry's Web site said Tuesday. Despite the revision, June soybean imports were still at a record monthly high.

 

In overseas markets, soybean futures on the Dalian Commodity Exchange clawed back early-session losses Tuesday, hitching onto a late rally in equity markets. The benchmark January 2010 soybean contract eventually settled 0.8% higher at RMB3,629 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange rose Tuesday on a technical rebound, recouping the previous day's sharp losses. The benchmark September CPO contract on the Bursa Malaysia Derivatives ended MYR129 higher at MYR2,286 a metric tonne.