January 15, 2010

CBOT Soy Outlook on Friday: Mixed; consolidating after volatile week

Chicago Board of Trade soybean futures are seen starting Friday's day session with a mixed undertone, as the market consolidates after a volatile week of activity.

In overnight trade, March soybeans were 3/4 cent higher at US$9.84 3/4, and May soybeans were unchanged at US$9.90 3/4.

Futures are consolidating before their next price move, with positioning-type trade anticipated ahead of a three-day weekend, said Midwest Market Solutions' Brian Hoops in a market note.

Limited news is seen adding to the consolidative theme, but strength in the U.S. dollar and weakness in crude oil and metal futures is expected to provide some grief to market bulls, said Victor Lespinasse, analyst with Grainanalyst.com.

Bearish underlying fundamentals remain a hindrance to upside movement, with rising South American production estimates and the fear of slowing Chinese soybean demand expected to keep a lid on price gains.

A market technician said serious technical damage has been inflicted recently, to suggest a near-term market top is in place. The next upside technical objective for March soybeans is pushing and closing prices above major psychological resistance at US$10.00. The next downside price objective is pushing and closing prices below solid technical support at the November low of US$9.55 3/4.

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled marginally lower Friday, tracking a weak performance on CBOT Thursday. The September 2010 soybean contract settled RMB3, or 0.1%, lower at RMB3,928 a metric tonne.

Cash soybean prices in China's major producing areas were slightly lower in the week ended Friday, plagued by a tumble in soybean futures earlier this week.

Crude palm oil futures on Malaysia's derivatives exchange ended lower Friday as export estimates failed to impress a market concerned about rising stock levels and production, said trade participants. The March CPO contract on the Bursa Malaysia Derivatives ended down MYR40 at MYR2,490 a metric tonne.