June 24, 2008

 

CBOT Soy Outlook on Tuesday: Up 2-3 cents on outside support, market uncertainties

 

 

Chicago Board of Trade soybean futures are expected to begin Tuesday's day session higher, in tune with the overnight theme, as outside market support and the unknowns of the market produce cautious activity, analysts said.

 

CBOT soybean futures are called to start the session 2 to 3 cents higher.

 

In overnight electronic trading, July soybeans were 2 3/4 cents higher at US$15.17 3/4 and November soybeans were 2 1/2 cents higher at US$15.05. December soyoil was 10 points higher at 65.12 cents per pound and July soymeal was US$0.20 higher at US$404.20 per short tonne.

 

The market is poised to start firmer, with weakness in the U.S. dollar and firmer crude oil prices lending support, while transitioning weather patterns and demand uncertainties allows prices to stabilize after a recent correction, analysts said.

 

"There remains a lot of unknowns in the market, and that will continue to create volatility," a CBOT floor broker said.

 

The weather remains a supportive feature, as a chance for showers in two-week maps continues to keep traders skeptical that plantings and early crop development is without risk, he added.

 

Meanwhile, traders are seen taking a cautious approach heading into end-of-month stock and acreage reports. The market remains susceptible to month- and quarter-end liquidation, with outlooks for supplies to begin to flow out of Argentina in the near term seen forcing old/new crop spreads to narrow, a trader said.

 

The U.S. Department of Agriculture reported Monday that 91% of the U.S. soybean crop was planted, up from 84% last week but below the five-year average of 96%. Traders had expected 90% to 95% of the U.S. soybean crop to be planted.

 

In Iowa, 95% of the soybean crop was planted, up from 88% last week but still shy of the 100% average. Illinois reported planting 91% of its anticipated soybean crop, up from 73% a week earlier, but below the average of 98%. Indiana has planted 90% of its soybeans, compared to 80% a week ago and a five-year average of 96%.

 

The USDA said 82% of the U.S. soybean crop has emerged, up from 71% last week but below the average of 93%.

 

The USDA said 57% of the U.S. soybean crop was rated in good to excellent condition, up 1 percentage point from the previous week and on target with analysts' projections of no change to a 3-point increase.

 

Receding floodwaters and generally improving weather have aided fieldwork, and, to some extent, crop development.

 

"If this week's a little better and next week's a little better we may have seen the low point for this part of the season," said Dale Durchholz, senior market analyst at AgriVisor in Bloomington, Ill.

 

The DTN Meteorlogix weather forecast said rainfall has been added to the short- and long-range forecasts for the U.S. Midwest. This likely means further concerns about crop quality and about flooding, Meteorlogix said.

 

A technical analyst said market bulls are still in technical command of soybeans, with no signs of a market top being close at hand. The next upside price objective for November soybeans is to push and close prices above solid technical resistance at the contract high of US$15.66 3/4 a bushel. The next downside price objective is pushing and closing prices below solid technical support at Monday's low of US$14.73 3/4.

 

First resistance for November soybeans is seen at Monday's high of US$15.06 3/4 and then at US$15.20. First support is seen at US$14.90 and then at Monday's low of US$14.73 3/4.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange reversed three consecutive days of losses, rising Tuesday on buying as technical charts showed the possibility of a rebound. The benchmark January 2009 soybean contract rose RMB30 to settle at RMB4,902 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Tuesday on fears of weak exports amid rising stocks, trade participants said. The benchmark September contract on the Bursa Malaysia Derivatives ended MYR55 lower at the intraday low of MYR3,503 a metric tonne.