February 17, 2010

CBOT Soy Outlook on Wednesday: Lower; minor correction from recent gains

Soybean futures on the Chicago Board of Trade are poised for a lower start to Wednesday's day session in a minor correction from recent gains.

CBOT soybeans are expected to open 2 cents to 4 cents lower.

Overnight, CBOT March soybeans gained 4 1/4 cents to US$9.61 1/4 a bushel, and May soybeans were 4 cents higher at US$9.70 1/2.

Profit-taking pressure from Tuesday's strong gains is on tap to start the session, as traders level off some positions on the feeling that the advances were overdone, a CBOT floor analyst said.

Short-term technical indicators are overbought, and without fresh supportive news to keep buyers enthused, sellers are expected to emerge. A firmer U.S. dollar is seen weighing on prices, as the reversal of Tuesday's dollar movement takes away one of the strong bullish features that buoyed prices.

Otherwise, traders anticipate choppy market activity, keeping an eye on the U.S. dollar in the absence of other market moving news.

A market technician said the next downside price objective for March soybeans is pushing and closing prices below solid technical support at last week's low of US$9.18 3/4. The next upside technical objective is pushing and closing March prices above major psychological resistance at US$10.00.

The National Oilseed Processors Association said 162.397 million bushels of soybeans were crushed in January. That's down from 164.4 million in December, but slightly higher than the average analyst estimate of 162.03 million. The report confirmed a trend by U.S. soy processors of being aggressive in their operations ahead of keen export competition from Latin America, AgResource said in a market note. Soyoil stocks were pegged at 2.695 billion pounds, up from 2.594 billion in December and just below the average analyst estimate of 2.701 billion.

The DTN Meteorlogix weather forecast said mainly favorable conditions for filling soybeans are expected for Mato Grasso to Rio Grande do Sul during the next 10 days.

In Argentina, episodes of scattered showers and thunderstorms and no significant hot weather will favor filling corn and soybeans in the major growing areas, Meteorlogix forecasts.

In other overseas markets, crude palm oil futures on Malaysia's derivatives exchange ended higher Wednesday on the back of higher-than-expected exports and higher crude oil futures, said trade participants. The May CPO contract on the Bursa Malaysia Derivatives ended MYR48 higher at MYR2,628 a metric tonne.

Soybean futures traded on the Dalian Commodity Exchange were closed for the Lunar New Year holiday.

Rotterdam soybean prices were higher while soymeal prices were steady to higher. European vegoil prices were steady to higher.