August 11, 2009

 

CBOT Soy Outlook on Tuesday: Up 17-19 cents; fundamentals, lack of outside pressure

 

 

Soybean futures on the Chicago Board of Trade are seen starting Tuesday's day session firmly underpinned, buoyed by bullish fundamentals and a lack of bearish outside market influences.

 

CBOT soybean futures are seen opening 17 cents to 19 cents higher.

 

CBOT soybean prices were mixed overnight. August was 19 1/2 cents a bushel higher at US$11.90, September was 16 1/4 cents higher at US$10.83 3/4, while November climbed 17 1/4 cents to US$10.27 1/4.

 

Tight supplies, uncertainty tied to 2009 crop production and talk of China import demand continuing to grow serves as fundamental strength to attract buying, analysts said.

 

The outside markets aren't providing bullish support, but aren't providing a bearish influence either, a CBOT floor analyst said. In early action, the U.S. dollar index is lower and crude oil and gold futures are posting modest gains.

 

Otherwise, traders anticipate a session filled with the evening of positions heading into Wednesday's crop reports. U.S. Department of Agriculture is scheduled to release its first 2009 crop-production estimates based on field surveys and its monthly supply-and-demand estimates Wednesday at 8:30 a.m. EDT (1230 GMT).

 

A market technician said first resistance for November soybeans is seen at US$10.20 and then at US$10.30. First support is seen at Monday's low of US$10.08 and then at US$10.00.

 

The USDA on Tuesday announced private export sales of 110,000 metric tonnes of soybeans for delivery to China in the 2009-10 marketing year.

 

The USDA rated 66% of the U.S. soybean crop as good-to-excellent, down 1 percentage point from last week. The crop was 86% blooming, compared with 87% last year and the average of 93%, according to the USDA. Fifty-five percent of the crop was reported setting pods, down from 57% last year, and below the five-year average of 72%.

 

The slower-than-average development pace means that the crop will be faced with a race to maturity, needing to beat a fall frost in order to limit crop damage, said Don Roose, president U.S. Commodities. The report shows the eastern belt will need a longer growing season, he added.

 

In other news, China's soybean imports in July rose 25% to 4.39 million metric tonnes, the General Administration of Customs said Tuesday. In the January-July period, soybean imports rose 28% compared with the same period last year to 26.48 million tonnes.

 

Meanwhile, China's deputy chief of the economic and trade department under the National Development and Reform Commission, Liu Xiaonan said Tuesday, China's domestic soybean output growth can't match the rate of rising demand, so imports will continue to rise.

 

The government will continue to adjust subsidization and reserve policies to support the local soybean industry, Liu said at a soybean conference. The government will also encourage processing plants to increase their soybean reserves as well, he said.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday, boosted by ample liquidity, even as their CBOT counterparts settled lower Monday. The benchmark May 2010 soybean contract settled RMB49 a metric tonne higher, or1.3%, at RMB3,770/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange extended gains Tuesday, rising as much as 2.8% as traders covered short positions while rallying crude and soyoil lent support to prices. The benchmark October CPO contract on the Bursa Malaysia Derivatives settled MYR65 higher at MYR2,465 a metric tonne.