February 17, 2009

Soybean futures on the Chicago Board of Trade are expected to start Tuesday's day session on the defensive, pressured by weakness in outside markets and forecasts for rain in Argentina.

 

CBOT soybean futures are called 15 cents to 17 cents lower.

 

In overnight electronic trading, March soybeans finished 17 cents lower at US$9.38 1/2. March soymeal was US$4.80 lower at US$292.90 a short tonne, while March soyoil ended 66 points lower at 32.34 cents a pound.

 

The lack of bullish features coupled with fresh bearish news have soybeans poised for a lower start to the holiday shortened trading week, said Vic Lespinasse, analyst with Grainsanalyst.com.

 

Bearish macro market influences, with expected weakness in stock indexes, lower crude oil futures and forecasts for some timely rains in parts of Argentina, are seen extending the market's recent downturn, Lespinasse added.

 

A quiet news front will keep traders eyeing outside markets and midday forecasts for direction, but any sign of exhausted selling is expected to attract short-covering, traders said.

 

A technical analyst said the next upside price objective for March soybeans is to push and close prices back above psychological resistance at US$10.00 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$9.00 a bushel.

 

First resistance for March soybeans is seen at US$9.50 and then at US$9.60. First support is expected to be at the February low of US$9.34 1/2 and then at US$9.25.

 

DTN Meteorlogix weather said rainfall in Argentina during the long weekend period was somewhat less than expected. Hot temperatures were reported until a cold front moved through Monday. Dryness and periodic hot temperatures continue to have an impact on yield potential for crops in La Pampa and western Buenos Aires, Meteorlogix said. Crops in Cordoba and Sante Fe are likely doing better after recent rains, Meteorlogix added.

 

The National Oilseed Processors Association says 139.1 million bushels of soybeans were crushed in January, up from 134.8 million in December, just above the average analyst estimate of 138.1 million. The range of pre-report estimates was 136 million to 139.5 million. Soyoil stocks were pegged at 2.394 billion pounds, up from 2.176 billion, and above the average analyst estimate of 2.233 billion. The range of estimates was 2.211 billion pounds to 2.276 billion pounds.

 

Larger-than-expected soyoil stocks is expected to weaken soyoil prices, with spillover pressure from crude oil helping weaken soyoil on meal/oil spreads.

 

Index funds decreased their net long positions in CBOT soybean futures and options. The combined number fell to 98,297 contracts from 99,133 the prior week, according to the Commodity Futures Trading Commission in its supplemental commitments of traders report released Friday.

 

Large speculative traders now hold 27,518 net long positions in CBOT soybean futures and options combined contracts as of Feb. 10, compared with net longs of 19,815 in the previous week, according to CFTC. Commercials held net short combined futures and options positions totaling 102,708 contracts, up from the previous week's 92,174 contracts, as reported in the CFTC supplemental report.

 

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

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Tuesday, and the market is likely to consolidate in the near term, analysts said. The benchmark September 2009 soybean contract settled RMB36 lower at RMB3,474 a metric tonne, or down 1.0%.

 

Meanwhile, China imported 20,000 metric tonnes of soyoil in January, down 87% on year, according to preliminary data issued by the General Administration of Customs Tuesday. In December, imports fell 49% on year.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower after choppy trade Tuesday amid weak soybean oil and news of Indonesia's plans to permit acreage expansion, said market participants. The benchmark May contract on the Bursa Malaysia Derivatives ended MYR27 lower at MYR1,895 a metric tonne.