January 20, 2009

Chicago Board of Trade soybean futures are expected to open lower Tuesday on pressure from lower crude oil and a stronger dollar, traders said.

 

Soybeans are called 2 to 4 cents lower. In overnight trading, March soybeans were down 3/4 cent to US$10.19 1/4 per bushel, May soybeans were down 1 3/4 cents to US$10.27 1/4 and July soybeans were down 1 1/4 cents to US$10.37 1/4.

 

March soyoil was down one point to 34.58 cents per pound and March soymeal was down 10 cents to US$315.90 per short tonne.

 

Weather patterns in South America and concerns about a dry crop remain a focus of the market. Brazil has received beneficial rains with more in the forecast, but in Argentina there is "increasing stress to developing soybeans due to hot, dry weather," according to DTN Meteorlogix. The forecast calls for continued dry weather in Argentina through Saturday.

 

A widening corn-soybean spread in recent weeks has heightened concern about a lack of planted acres, and soybeans can't climb too far ahead of corn, some traders said. But soybeans have a stronger fundamental picture, analysts add.

 

"If we're going to move up we're going to move on demand and weather issues, and beans have the demand and beans have the weather issues," said Chad Henderson, analyst with Prime Ag Consulting.

 

Still, Henderson said "I don't know if there's enough of a weather bull to push beans above the US$10.30, US$10.40 or US$10.50 level in the March contract. I think that's going to be tough to get through."

 

The next upside price objective for the bean bulls is to push and close March prices back above solid technical resistance at the January high of US$10.60 1/4 a bushel, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid technical support at last week's low of US$9.57 3/4 a bushel.

 

First resistance for March soybeans is seen at Friday's high of US$10.22 3/4 and then at US$10.25, the technical analyst said. First support is seen at US$10.00 and then at US$9.90.

 

Speculative funds added 6,298 contracts to their CBOT soybean long positions and cut seven contracts from their short positions, putting them net long 23,661 contracts, the Commodity Futures Trading Commission said Friday.

 

The supplemental commitment of traders report also showed commercial funds added 1,566 contracts to their long positions and 402 contracts to their short positions, putting them net short 97,559 contracts. Index funds added 612 contracts to their long positions and 1,587 contracts to their short positions, putting them net long 95,245 contracts, the CFTC said.

 

The soy complex traded on Dalian's Commodity Exchange retreated Tuesday, tracking losses on Chicago's electronic bourse, weaker European equities and renewed fears of instability in financial markets.

 

The benchmark September 2009 soybean contract lost 1% to settle at RMB3,427 a metric tonne.