February 2, 2009

Soybean futures on the Chicago Board of Trade are seen starting Monday's day session lower, pressured by bearish economic outlooks and South American weather.

 

CBOT soybean futures are called 10 cents to 12 cents lower.

 

In overnight electronic trading, March soybeans finished 9 3/4 cents lower at US$9.70 1/4. March soymeal was US$3.80 lower at US$307.20 per short tonne, while March soyoil ended 38 points lower at 32.35 cents per pound.

 

Lingering economic woes reflected in weakness in outside crude oil, gold, silver and equity markets as well as a firmer tone in the U.S. dollar sets the stage for early weakness, analysts said.

 

The gradual improvement of Argentina weather conditions and favorable Brazilian crop weather adds to the defensive tone, with traders also concerned about a possible shift of Chinese demand to South American ports following last week's Lunar New Year break, said Jason Roose, analyst with U.S. Commodities.

 

Otherwise, fresh news is limited, with traders expected to take a cautious approach amid the potential for shifting weather outlooks and underlying fundamental and economic uncertainty.

 

A technical analyst said the next upside price objective for March soybeans is to push and close prices back above solid technical resistance at last week's high of US$10.41 1/2 a bushel. The next downside price objective is pushing and closing prices below solid technical support at the January low of US$9.57 3/4 a bushel.

 

First resistance for March soybeans is seen at Friday's high of US$9.89 1/2 and then at US$9.94. First support is seen at Friday's low of US$9.65 and then at US$9.57 3/4.

 

The DTN Meteorlogix forecast said Argentina's current weather pattern continues to struggle to produce significant rain with good coverage in key crop areas. The forecast calls for chances of showers every few days or so but there has yet to be a general coverage rain. This means despite less stressful weather recently and some good rains in some locations there are still some locations that are very dry, Meteorlogix said.

 

Index funds increased their net long positions in CBOT soybean futures and options combined to 96,568 contracts, up from 95,723 the prior week according to the Commodity Futures Trading Commission in its supplemental commitments of traders report released Friday.

 

Large speculative traders now hold 24,520 net long positions in CBOT soybean futures and options combined contracts as of Jan. 27, compared with net longs of 19,856 in the previous week, according to CFTC. Commercials held net short combined futures and options positions totaling 98,794 contracts, up from the previous week's 94,505 contracts, as reported in the CFTC supplemental report.

 

On tap for Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11:00 a.m., EST.

 

Brazilian farmers sold 30% of the new 2008-09 soy crop by Jan. 30, Brazilian agribusiness consultancy Cerealpar said Monday. Cerealpar said Brazilian sales compared to 50% at the same time in 2008 and a five-year average of 40%.

 

In overseas markets, soybean futures fell slightly on the Dalian Commodity Exchange Monday, as the market reopened after the week-long Chinese New Year holiday to play catch-up with losses on CBOT. The benchmark September 2009 soybean contract lost 0.3% to settle at RMB3,376 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange was closed Monday for public holidays.