February 9, 2009

Soybean futures on the Chicago Board of Trade are seen starting Monday's day session on firm footing, buoyed by pre-crop report positioning amid outlooks for lower South American production.

 

CBOT soybean futures are called 8 cents to 10 cents higher.

 

In overnight electronic trading, March soybeans finished 8 3/4 cents higher at US$10.09 3/4. March soymeal was US$1.00 higher at US$318.30 per short tonne, while March soyoil ended 49 points higher at 33.89 cents per pound.

 

Private forecasters calling for lower South American production have futures poised for short covering gains ahead of Tuesday's U.S. Department of Agriculture supply and demand report, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Contrasting weather outlooks for Argentina and support from outside markets are expected to provide some price strength as well, Roose added.

 

However, traders will stay on guard for potential shifts in midday weather forecasts for Argentina while paying close attention to developments with a U.S. stimulus package. Both the weather and the economy could have psychological impacts to alter price direction, analysts said.

 

Meanwhile, news of a fresh export sale to China is a positive feature for the market, traders added.

 

A technical analyst said the next upside price objective for March soybeans is to push and close prices 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$9.34 1/2 a bushel.

 

First resistance for March soybeans is seen at Friday's high of US$10.07 3/4 and then at US$10.25. First support is seen at US$9.87 3/4 and then at Friday's low of US$9.76 3/4.

 

The DTN Meteorlogix weather forecast said another period of above normal temperatures and below normal rainfall is on tap for Argentina crop areas during the next 7-10 days. The conditions will further stress corn, soybeans and sunflowers already experiencing significant stress and crop losses during this growing season, Meteorlogix said. The crop most vulnerable to further losses with this pattern are soybeans, Meteorlogix added.

 

Private exporters reported the sale of 120,000 metric tonnes of soybeans for delivery to China during the 2008/2009 marketing year, the USDA said Monday.

 

Index funds increased their net long positions in CBOT soybean futures and options combined to 99,133 contracts, up from 96,568 the prior week according to the Commodity Futures Trading Commission in its supplemental commitments of traders report released Friday.

 

Large speculative traders now hold 19,815 net long positions in CBOT soybean futures and options combined contracts as of Feb. 3, compared with net longs of 24,520 in the previous week, according to CFTC. Commercials held net short combined futures and options positions totaling 92,174 contracts, up from the previous week's 98,794 contracts, as reported in the CFTC supplemental report.

 

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

 

USDA is scheduled to release its February supply and demand report Tuesday 8:30 a.m. EST. Analysts surveyed by Dow Jones Newswires anticipate downward revisions in South American production and a tighter U.S. balance sheet.

 

The average of trade guesses from the 14 analysts surveyed by Dow Jones Newswires peg 2008-09 estimated U.S. ending stocks at 203 million bushels, a 22 million bushel reduction from January's forecast. The estimates ranged from 123 million bushels to 230 million bushels.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Monday, following gains Friday on CBOT. The benchmark September 2009 soybean contract settled up RMB48, or 1.4%, at RMB3,580 a metric tonne.

 

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