February 4, 2009

Chicago Board of Trade soybean futures are expected to open 7 to 9 cents higher Wednesday on supportive outside markets and ideas the market is oversold, analysts said.

 

In overnight trading, March soybeans were up 9 1/4 cents to US$9.55 1/4 per bushel and May soybeans were up 8 1/4 cents to US$9.58 1/2.

 

March soymeal was up US$1 to US$302.80 per short tonne, and March soyoil was up 59 points to 32.12 cents per pound.

 

After falling Monday and Tuesday, the market is seen as short-term oversold, which contributed to the overnight gains, traders said.

 

The market has been pressured this week by healthy recent rains in Argentina, which prompted the trade to remove some weather premium. The rains in the drought-stricken country provide temporary relief for the crop, but traders and analysts say it's far from out of the woods.

 

"This week's rains will stabilize crops, but more rains will need to follow if conditions (are) to improve," Kim Rugel, analyst for Benson Quinn Commodities, said in a market commentary.

 

A trader added that Cropcast's weather forecast Wednesday morning for Argentina appeared to be drier, which could lend support to the market.

 

Although the dollar has turned stronger, which is usually bearish for commodities, outside markets overall appear to be supportive, traders said. Higher crude oil could give support, although a trader said the grains and soybeans aren't following crude, the dollar and U.S. equities nearly as closely as they were a couple months ago.

 

"It's starting to break down quite a bit," he said of the relationship.

 

Soybeans were higher on the Dalian Commodity Exchange Wednesday, buoyed by gains in the wider commodities complex, expectations of production cuts in South American crops and drought reports in north China. The benchmark September 2009 soybean contract gained 1.2% to settle at RMB3,465 per metric tonne.

 

The next upside price objective is to push and close March prices back above solid technical resistance at last week's high of US$10.41 1/2 per bushel, a technical analyst said. The next downside price objective is pushing and closing prices below major psychological support at US$9.00 per bushel.

 

First resistance for March soybeans is seen at Tuesday's high of US$9.62 3/4 and then at this week's high of US$9.76 1/4, the technical analyst said. First support is seen at Tuesday's low of US$9.34 1/2 and then at US$9.25.