March 30, 2010

 

CBOT Soy Outlook on Tuesday: Seen up on dollar, Argentine strike

 

 

A weaker U.S. dollar and lingering support from an Argentina dock workers strike have Chicago Board of Trade soybean futures poised for a firm start to Tuesday's day session.

 

CBOT soybeans are seen opening 2 cent to 3 cents higher.

 

Overnight, CBOT May soybeans were 2 1/2 cents higher at US$9.70 a bushel, and November soybeans were 3 cents higher at US$9.28 1/2.

 

The market is seen up in tune with the overnight theme, following through on Monday's strength that pushed prices to the upper end of a recent trading range.

 

A lower U.S. dollar and a port strike that limits Argentina's ability to load out supplies for export are supportive features for the market. The inability of Argentina to move supplies could encourage China to shift buying interest to U.S. origins if the strike lingers on, according to a market note from Midwest Market Solutions.

 

However, after rallying on the same bullish features Monday, the impact of these factors may be muted heading into Wednesday's U.S. Department of Agriculture planting intention and quarterly grain stocks reports.

 

USDA will release its planting intentions and quarterly stocks reports Wednesday at 8:30 a.m. EDT. The average analyst estimate puts soybean area at 78.550 million acres, up from last year's 77.451 million, according to a Dow Jones Newswires survey. The estimates from the 23 analysts surveyed ranged between 77.430 million and 79.500 million acres.

 

The average of estimates by analysts surveyed by Dow Jones Newswires sees soybean usage in the second quarter of the 2009-10 marketing year coming in around 1.130 billion bushels, which would bring stocks down to 1.207 billion bushels.

 

Old/new crop spreading is expected to remain a feature, with nearby contracts supported by the potential for a bullish quarterly stocks figure amid strong usage for exports and crush in the first half of the marketing year. Outlooks for increased U.S. soybean plantings in 2010 following record South American production is expected to limit any upside potential deferred/new crop contract months.

 

End of the month and quarter position evening is expected to promote a choppy, two-sided theme as well, a CBOT floor broker said.

 

A technical analyst said the next downside price objective for May soybeans is pushing and closing prices below solid technical support at last week's low of US$9.41 3/4. The next upside technical objective is pushing and closing May prices above solid technical resistance at the February high of US$9.85.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday, led by gains in soyoil amid talk of a curb on imports. The September 2010 soybean contract settled RMB16, or 0.4%, higher at RMB3,883 a metric tonne.