February 6, 2009

Chicago Board of Trade soybean futures are poised to start Friday's day session higher, as bullish Argentina weather forecasts raise concerns about further yield losses in the southern hemisphere.

 

CBOT soybean futures are called 10 cents to 15 cents higher.

 

In overnight electronic trading, March soybeans finished 16 1/2 cents higher at US$9.96 1/2. March soymeal was US$5.80 higher at US$313.80 per short tonne, while March soyoil ended 33 points higher at 33.38 cents per pound.

 

After a sharp price break from January highs, the market is putting risk premium back in the market amid outlooks for a return to hot/dry weather conditions in Argentina next week, said Vic Lespinasse, analyst with Grainsanalyst.com.

 

Technically inspired buying is expected to push prices above overhead resistance levels, attracting speculative short covering, analysts added.

 

Weather will take center stage, as mixed signals from outside markets are not providing any definitive influence in early action. However, traders are expected to remain on guard for the rolling of index fund positions, with pre-weekend position evening potentially limiting upside movement as the day unfolds, analysts added.

 

A technical analyst said the next upside price objective for March soybeans is to push and close prices back above major psychological resistance at US$10.00 a bushel. The next downside price objective is pushing and closing prices below solid technical support at this week's low of US$9.34 1/2 a bushel.

 

First resistance for March soybeans is seen at Thursday's high of US$9.87 3/4 and then at US$9.94. First support is seen at US$9.68 1/4 and then at US$9.50.

 

The DTN Meteorlogix weather forecast said thundershowers during the past 2 days have helped to ease stress to Argentina crops. However, there is no significant chance for rainfall in the area for the next 10 day days, Meteorlogix said. In addition, it will likely become quite hot again by the middle of next week and continuing to the end of the period. Should this forecast verify, crops will come under increasing stress next week, Meteorlogix added.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Friday, tracking broad gains in external markets, including gains overnight in soybean contracts on CBOT. China's benchmark September 2009 soybean contract settled RMB50, or 1.4%, higher at RMB3,532 a metric tonne.

 

Cash soybean prices in China's major producing areas were stable in the week to Friday, supported by the government's efforts to shore up commodities prices.

 

Crude palm oil futures on Malaysia's derivatives exchange rose above MYR1,900 a metric tonne for the first time in 24 days on fresh buying and spillover support from soybean oil, but eased off on profit-taking. The benchmark April contract on the Bursa Malaysia Derivatives ended MYR1 higher at MYR1,880/tonne after moving in a range between MYR1,854 and MYR1,908.