January 15, 2008

 

CBOT Soy Outlook on Tuesday: Down 2-4 cents; consolidates from all-time highs

 

 

Soybean futures on the Chicago Board of Trade are seen starting Tuesday's day session lower, consolidating after previous runs to all-time highs.

 

CBOT soybean futures are called to start the session 2 to 4 cents lower.

 

In overnight e-CBOT trading, March soybeans were 1 3/4 cent lower at US$12.94 3/4, July soybeans were 1 cent lower at US$13.31, and November soybeans were 5 3/4 cents higher at US$12.68 3/4.

 

The market should come under a little pressure Tuesday, having adjusted to the crop report as seen by Monday's reversal off its highs, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

Futures are showing signs of being close to an intermediate top, and will shift focus to South American weather and export demand while continuing to place close attention on potential spring acres, Roose said.

 

Overnight weakness in crude oil futures, a pullback in precious metals and signs that index fund rebalancing is slowing open the door for the market to take a breather from an aggressive push to higher levels, analysts said.

 

Nevertheless, bullish underlying fundamentals will limit profit-taking setbacks, as the upward trend remains intact, analysts said.

 

A technical analyst said that although market bulls still have the near-term technical advantage, Monday's price action could have produced a bearish buying "exhaustion tail" on the daily bar chart, whereby selling interest dries up at higher price levels and prices back way off as bulls become exhausted. Now, Monday's all-time high of US$13.41 becomes very strong overhead technical resistance for the bulls to overcome, he said.

 

The next downside price objective for March soybeans is pushing prices below solid technical support at US$12.70 1/2, which is the bottom of an upside price gap on the daily bar chart. First resistance for March soybeans is seen at US$13.10 1/4 and then at US$13.25. First support is seen at US$12.84 and then at US$12.70 1/2.

 

The DTN Meteorlogix Weather Service said another fairly hot day on tap for Argentina Tuesday will stress pollinating corn and developing soybeans and sunflowers. There should be showers and a few thunderstorms in the region Wednesday and Thursday. Coverage looks to be low. The six- to 10-day period looks to be drier and warmer than normal, Meteorlogix forecast.

 

In other news, India's edible oil imports in December fell by around 25% on year to 276,782 metric tonnes, due to good crushing of local oilseeds and high international prices, according to data released by the Solvent Extractors' Association of India.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mixed Tuesday after the government repeated its stance on controlling prices. The benchmark September 2008 soybean contract settled RMB46 lower at RMB4,797 a metric tonne.

Crude palm oil futures on Malaysia's derivatives exchange fell sharply Tuesday, after half-month exports were estimated to be the lowest in several years and concerns arose over possible clampdown on imports of some crops in the European Union to make biodiesel. The benchmark April contract on Bursa Malaysia Derivatives ended MYR85 lower at MYR3,320 metric tonne after reaching an intraday low of MYR3,318/tonne.