January 5, 2010

 

CBOT Soy Outlook on Tuesday: Up 2-4 cents on dollar, solid demand

 

 

Chicago Board of Trade soybeans are expected to open higher Tuesday amid modest outside market support, traders said.

 

Soybeans are called 2 to 4 cents higher. In overnight trade, January soybeans were up 4 1/2 cents to US$10.54 per bushel and March soybeans were up 4 1/2 cents to US$10.62 1/2.

 

March soyoil was up US$0.17 to 41.46 cents per pound and March soymeal was down US$0.20 to US$308.10 per short tonne.

 

A weaker dollar should provide some support, traders said, as bulls look to extend gains from Monday's trade. Fundamentally there's little fresh news to spur the market higher, and a trader said profit-taking could limit the gains.

 

Export demand remains strong and is a key underlying supportive feature to the market, a floor trader said.

 

Supply fundamentals are seen as bearish, with some expecting the U.S. Department of Agriculture to hike the 2009 crop yield in its Jan. 12 report. Traders also note that South American weather is bearish, as favorable conditions spark talk of potential record yields.

 

But a trader said that bearish news has had little effect on the market so far.

 

"That's nothing new. The market rallied right through that," the trader said.

 

The next upside technical objective for the bulls is pushing and closing March prices above solid technical resistance at US$10.84, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid technical support at US$10.27.

 

First resistance for March soybeans is seen at Monday's high of US$10.74 3/4 and then at US$10.84. First support is seen at Monday's low of US$10.50 and then at US$10.40.

 

Soybean futures on the Dalian Commodity Exchange settled little changed Tuesday, with other markets helping to support soy and soy products.

 

The benchmark September 2010 soybean contract settled RMB1, or 0.02%, higher at RMB4,070 a metric tonne.

 

Also, crude palm oil futures on Malaysia's derivatives exchange rose for the fourth successive trading day to the highest level in more than seven months as crude oil prices neared US$82 a barrel.

 

Trade participants said positive leads from both soyoil and crude oil prices in after-hours trade helped the rally but cautioned prices may decline on profit-taking amid fears end-December palm oil reserves may be higher while export demand in January may be little changed from last month.

 

Managed money accounts added 11,626 contracts to their CBOT soybean long positions and cut 4,187 contracts from their short positions in the week ended Dec. 29, the CFTC said Monday in a weekly disaggregated commitments of traders report.

 

Meanwhile, the supplemental commitments of traders report showed that traditional speculative funds cut 2,676 contracts from their long positions and cut 3,705 contracts from their short positions, leaving them net long 39,220 contracts. The March contract gained 48 1/2 cents during that period.