January 21, 2009

Chicago Board of Trade soybean futures are seen starting Wednesday's day session lower, influenced by carryover selling from Tuesday in the absence of fresh fundamental news.

 

CBOT soybean futures are called 3 cents to 4 cents lower.

 

In overnight electronic trading, March soybeans finished 4 cents lower at US$9.88. March soymeal was US$0.60 lower at US$308.40 per short tonne, while March soyoil ended 36 points lower at 33.45 cents per pound.

 

The market is taking a hint from Tuesday's poor technical close that produced some chart damage, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Weakness from overall economic worries and private weather forecasts calling for improved rain chances in Argentina have futures poised for price declines as well, Roose added.

 

However, the uncertainty of the weather outlooks and market thoughts that forecasted rains won't be significant enough to end drought conditions in Argentina is expected to provide underlying support.

 

Nevertheless, outlooks for increased 2009 U.S. soy acreage, talk of large old-crop Argentine stocks on farms and favorable Brazil crop prospects is seen limiting upside potential, unless yield losses can be confirmed in Argentina, analysts said.

 

A technical analyst said the five-week-old uptrend in prices on the daily bar chart appears to be "rolling over." The next upside price objective for March soybeans is to push and close prices back above solid technical resistance at the January high of US$10.60 1/4 a bushel. The next downside price objective 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 US$10.00 and then at US$10.25. First support is seen at Tuesday's low of US$9.77 1/2 and then at US$9.57 3/4.

 

The DTN Meteorlogix weather outlook said hot, dry weather again increases stress to crops during the next 4-5 days. Shower activity during Sunday/Monday time frame does not look to be enough to end concerns for crops, especially since it looks to be hotter and drier again after this chance for rain.

 

In demand news, Taiwan's Breakfast Soybean Procurement Association, or BSPA, has bought 99,000 metric tonnes of U.S. and Brazilian soybeans in a tender concluded Wednesday, an association official said.

 

On tap for Wednesday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11 a.m. EST. The report was delayed due to Monday's Martin Luther King Jr. holiday and Tuesday's U.S. presidential inauguration.

 

In overseas markets, soybean futures ended slightly lower on China's Dalian Commodity Exchange Wednesday, as nerves about a North American drought rattled the market and the run-up to Chinese New Year weakened domestic demand. The benchmark September 2009 soybean contract lost 0.9% to settle at RMB3,395 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Wednesday on weak demand in the cash market and negative cues from soyoil Tuesday, but managed to close above the crucial psychological mark of MYR1,800 a metric tonne. The benchmark April contract on Bursa Malaysia Derivatives ended MYR18 lower at MYR1,809/tonne after hitting an intraday low of MYR1,792.