January 19, 2010

 

CBOT Soy Outlook on Tuesday: Down 2-4 cents, follow through sales, outside pressure

 

 

Chicago Board of Trade soybean futures are expected to begin Tuesday's day session lower, pressured by carryover weakness from the recent downtrend and bearish outside market influences.

 

In overnight trade, March soybeans were 3 1/4 cents lower at US$9.70 3/4, and May soybeans were 4 cents lower at US$9.76 1/4.

 

The absence of fresh bullish news to support prices in seen extending the market's defensive theme, said Victor Lespinasse, analyst with Grainanalyst.com.

 

The U.S. dollar index is sharply higher, crude oil futures are lower in early trade and South American crops are developing well amid favorable weather conditions.

 

The January crop report and index fund rebalancing is out of the way, leaving a void in bullish attributes to buoy prices, analysts said.

 

A potentially record crop in Brazil, higher production in Argentina and less buying from China is seen weighing on soybean prices and could signal a near term trend.

 

However, end user buying on price breaks, underlying export demand and oversold technical conditions are expected to provide light support to limit downside pressure, analysts added.

 

A technical analyst said first resistance for March soybeans is seen at Friday's high of US$9.88 3/4 and then at US$10.00. First support is seen at last week's low of US$9.69 and then at US$9.55 3/4.

 

U.S. Department of Agriculture announced Tuesday private exporters reported the sale of 100,000 metric tonnes of U.S. soybeans to China for delivery in the 2009-10 marketing year.

 

The DTN Meteorlogix forecast said favorable weather conditions are on tap for developing soybeans throughout the major growing areas of Brazil with no significant heat or dryness indicated.

 

In Argentina, thundershowers Monday helped parts of Cordoba and Sante Fe. However, there appears to be a below normal rainfall pattern and an above normal temperature pattern during the next 10 days. Temperatures may be quite hot at times, Meteorlogix said.

 

USDA is scheduled to release its weekly export inspections report at 11 a.m., EST.

 

In overseas markets, soybean futures inched up on the Dalian Commodity Exchange Tuesday, in line with gains at CBOT, but analysts warned of supply pressures on prices ahead. The September soybean contract settled 0.3% higher at RMB3,921 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended mostly steady Tuesday, supported by bad weather that may have slowed palm oil output in the key oil palm growing state in Sabah. The April CPO contract on the Bursa Malaysia Derivatives ended unchanged at MYR2,490 a metric tonne.