January 6, 2009

 

CBOT Soy Outlook on Tuesday: Seen up on technical strength, weather, export demand

 

 

Soybean futures on the Chicago Board of Trade are poised for a higher start to Tuesday's day session, buoyed by technical strength, weather worries and underlying demand.

 

CBOT soybean futures are called 15 cents to 20 cents higher.

 

In overnight electronic trading, March soybeans finished 21 3/4 cents higher at US$10.08 3/4. March soymeal was US$6.40 higher at US$304.60 per short tonne, while March soyoil ended 68 points higher at 35.85 cents per pound.

 

The technical trend is up, with futures surpassing the psychological US$10.00 per bushel level overnight, and with lingering weather issues for Argentina higher action is the theme, said Vic Lespinasse, analyst with Grainanalyst.com.

 

Consistent export demand from China remains an underpinning feature as well.

 

Private exporters reported to the U.S. Department of Agriculture export sales of 232,000 metric tonnes of soybeans for delivery to China during the 2008-2009 marketing year, the USDA said Tuesday.

 

The market is also garnering support from higher crude oil futures, with soyoil futures expected to benefit from crude oil's advances as well.

 

However, overbought conditions and a strengthening U.S. dollar are seen as bearish influences that could attract profit taking on any sign of upside exhaustion, traders said.

 

A technical analyst said a four-week-old uptrend is in place on the daily bar chart. The next upside price objective for March soybeans is to push and close prices above major psychological resistance at US$10.00 a bushel. The next downside price objective is pushing and closing prices below solid technical support at last week's low of US$9.36 a bushel.

 

First resistance for March soybeans is seen at last week's high of US$9.93 1/4 and then at US$10.00. First support is seen at Monday's low of US$9.65 1/4 and then at US$9.50.

 

The DTN Meteorlogix weather forecast said Argentina's Cordoba province and possibly Sante Fe may see a few more thundershowers during the week, but little moisture is expected otherwise. Stress to corn and soybeans continue, especially with highs well into the 90s Fahrenheit Tuesday.

 

In Brazil, showers hit most soybean areas late last week, but the western soybean areas of Rio Grande do Sul were on the lower end of the range. This week looks to be drier and warmer again, Meteorlogix forecasts. Long range charts are more promising for rain in RGDS but the Parana and Mato Grosso do Sul area may be warmer and drier during the long range.

 

Commodity Futures Trading Commission in its supplemental commitments of traders report Monday reported index funds increased their net long positions in CBOT soybean futures and options combined, which now total 93,979 contracts, up from 90,770 the prior week.

 

Traditional large speculative traders now hold 14,424 net long positions in CBOT soybean futures and options combined contracts as of Dec. 30, compared with net longs of 7,315 in the previous week, according to CFTC. Commercials held net short combined futures and options positions totaling 91,773 contracts, up from the previous week's 81,900 contracts, as reported in the CFTC supplemental report.

 

In deliveries, January soybean deliveries totaled 178 lots. Issuers and stoppers were scattered across various commission houses. The last trade date assigned was December 31.

 

January soyoil deliveries totaled 892 lots. A customer account at Man Professional Clearing issued 887 lots, while stoppers were scattered among various commission houses. The last trade date assigned was Jan. 5.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday, tracking Monday's rise at CBOT. The benchmark May 2009 soybean contract settled RMB38, or 1.1%, higher at RMB3,451/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended up 7.8% at a three-month high Tuesday as two large trading companies bought fresh positions after selling in the physical market. The benchmark March contract on Bursa Malaysia Derivatives ended MYR143 higher at MYR1,980 a metric tonne.