January 7, 2009

 

CBOT Soy Outlook on Wednesday: Seen lower; profit-taking on recent rally

 

 

Soybean futures on the Chicago Board of Trade are expected to start Wednesday's day session on the defensive, as the market takes a breather from a month long bullish uptrend.

 

CBOT soybean futures are called 6 cents to 8 cents lower.

 

In overnight electronic trading, March soybeans finished 7 1/4 cents lower at US$10.08 3/4. March soymeal was US$1.30 lower at US$299.70 per short tonne, while March soyoil ended 49 points lower at 36.82 cents per pound.

 

Profit-taking from Tuesday's strong gains looks to serve as a bearish influence on prices in early action, analysts said. Weather forecasts pointing to improved rain chances in parched areas of South America are seen aiding the lower tone as well, analysts added.

 

However, speculative fund buying has been a feature in recent sessions and with a strong underlying export demand base and uncertainty surrounding South American production, futures remain firmly underpinned.

 

The market is poised to open lower, but a lack of follow-through selling could spark buying for futures to extend its recent rally to a new move high, a CBOT floor broker said.

 

A technical analyst said a four-week-old uptrend is in place on the daily bar chart, with the next upside price objective for March soybeans being to push and close prices above solid technical resistance at US$10.50 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 Tuesday's high of US$10.20 3/4 and then at US$10.36. First support is seen at US$10.00 and then at Tuesday's low of US$9.76 3/4.

 

The DTN Meteorlogix weather forecast said Argentina's Cordoba province and possibly Sante Fe may see thundershowers Wednesday or Thursday, but little moisture is expected otherwise. Longer range maps suggest a possible change in the weather pattern that would allow for more rain and less hot weather in this region. This change could occur as soon as early next week, Meteorlogix said.

 

In Brazil, hot, dry weather is on tap for the next few days, reducing available soil moisture as an upper level ridge forms over the area. This ridge is expected to break down again later in the period, allowing for more favorable weather for soybeans, Meteorlogix forecasts.

 

In deliveries, January soybean deliveries totaled 413 lots. The house account at Tenco issued 242 lots, while the house account at ADM Investor Services stopped 411 lots. The last trade date assigned was Jan. 2.

 

January soyoil deliveries totaled 629 lots. Customer accounts at Man Professional Clearing issued 334 lots, and stopped 305 lots. The last trade date assigned was Jan. 6.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday with the rise on CBOT Tuesday, but profit-taking limited the gains during the session. The new benchmark September 2009 soybean contract settled 32 yuan higher at RMB3,347 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended little changed in volatile trading Wednesday after rising above 2,000 ringgit a metric tonne for the first time in more than three months. The benchmark March contract on Bursa Malaysia Derivatives ended MYR5 higher at MYR1,985/tonne.