January 13, 2009

Soybean futures on the Chicago Board of Trade are poised to bounce back from Monday's limit down close, consolidating losses amid underlying fundamental support.

 

CBOT soybean futures are called 3 cents to 5 cents higher.

 

In overnight electronic trading, March soybeans finished 3 3/4 cents higher at US$9.69 3/4. March soymeal was US$1.20 higher at US$295.70 per short tonne, while March soyoil ended unchanged at 34.41 cents per pound.

 

Trade consolidation is shaping up to be the early theme, with the absence of follow-through selling overnight, lingering dryness issues in Argentina and continued demand from China serving as underpinning features, analysts said.

 

Mixed signals from outside markets are allowing the market to refocus on its fundamentals, but any aggressive follow-through weakness in neighboring grains could alter the higher overnight tone, a CBOT floor analyst added.

 

Crude oil futures are posting modest gains and the U.S. dollar is firm in early action.

 

A technical analyst said Monday's price action could well be the beginning of the seasonal "February Break" phenomenon on the grains. The next upside price objective for March soybeans is to push and close prices back above major psychological resistance at US$10.00 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$9.00 a bushel.

 

First resistance for March soybeans is seen at US$9.75 and then at US$10.00. First support is seen at US$9.50 and then at US$9.25.

 

The DTN Meteorlogix weather outlook said dry weather and episodes of hot temperatures increase stress on pollinating corn and developing soybeans and sunflowers. Some showers and thunderstorms are expected over the weekend but not enough to provide significant relief to crops. A pattern of little or no significant rainfall and episodes of hot weather will increase stress on developing corn, soybeans and sunflowers, Meteorlogix said.

 

In Brazil, rains in Rio Grande do Sul during the next 24 hours will be quite beneficial to developing soybeans. Rains in Parana the next few days will favor developing soybeans. Developing rain in the Mato Grosso later in the week will maintain favorable conditions for developing soybeans as well, Meteorlogix forecasts.

 

January soybean deliveries totaled 3 lots. The house account at ADM Investor Services stopped 2 lots. The last trade date assigned was Jan. 6.

 

China's soybean imports in December rose 13% from a year earlier to 3.3 million metric tonnes, initial trade data issued by the General Administration of Customs showed Tuesday. That compared with the 1.1% on-year fall in November, as the government's purchase of domestic soybeans helped to support local prices, causing traders to seek much cheaper imports.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled sharply lower Tuesday, as the market was disappointed by the U.S. Department of Agriculture's report Monday. The benchmark September 2009 soybean contract settled RMB123 lower at RMB3,376/tonne, down 3.5%.

 

Crude palm oil futures on Malaysia's derivatives exchange fell as much as 9.6% Tuesday due to falling crude oil prices, but ended off lows on a bullish near-term outlook for inventories and a government announcement that it will resume issuance of new biodiesel production licenses following a 30-month suspension. The benchmark March contract on Bursa Malaysia Derivatives ended MYR158 lower at MYR1,830 a metric tonne, off an intraday low of MYR1,797.