February 19, 2009

Chicago Board of Trade soybean futures are expected to start Thursday's day session higher, bouncing on supportive outside influences and oversold market conditions, analysts said.

 

CBOT soybean futures are called 6 cents to 8 cents higher.

 

In overnight electronic trading, March soybeans finished 8 cents higher at US$8.95 1/2, and May soybeans were 7 1/2 cents higher at US$8.94. March soymeal was US$2.20 higher at US$279.60 per short tonne, while March soyoil ended 30 points higher at 30.72 cents per pound.

 

After tumbling more than US$1 a bushel in the past week, soybean futures were a bit oversold and due for a mild corrective bounce, a CBOT floor analysts said.

 

Bearish weather conditions for South American crops are factored into prices, and with outside stock indexes and crude oil moving higher in conjunction with a weaker U.S. dollar index, futures are finding price support, he added.

 

Renewed concerns about a possible farmers strike in Argentina are seen adding support as well.

 

A new farm strike in Argentina appears increasingly likely following a Wednesday meeting where farm group leaders expressed frustration at silence from the government in response to their request for a meeting to negotiate agricultural policy.

 

Looking at technical charts, first resistance for March soybeans is seen at US$9.00 and then at Wednesday's high of US$9.09. First support is seen at Wednesday's low of US$8.84 1/2 and then at US$8.75.

 

In Brazil, heavy storms through the northern areas during the weekend will likely delay and disrupt the early soybean harvest, but will be drier and warmer later, Meteorologix said. Rains in Rio Grande Do Sul will be good for pod-filling soybeans.

 

It's hot and dry Thursday in Argentine, but DTN Meteorologix forecasts "a good chance for thunderstorms Friday and Saturday." The private weather firm said, "This rain will continue to improve the outlook for the soybean crop, especially late planted or double crop soybeans."

 

In other news, Wednesday afternoon the American Soybean Association said it's concerned the Environmental Protection Agency may conclude that soybean-based biodiesel does not meet the requirements it needs to qualify for a production mandate devised by Congress. In the renewable fuel standard Congress mandated 1 billion gallons of the biofuel by 2012 but it could be ended if the EPA decides biodiesel isn't as good for the environment as previously thought.

 

The ASA said the issue isn't production in the U.S. but the disruptive effect it is having to the environment overseas.

 

U.S. Department of Agriculture's weekly export sales report, normally released on Thursday, will be delayed until Friday 8:30 a.m. EST due to Monday's Presidents Day holiday.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange fell following the CBOT. The benchmark September 2009 soybean contract settled RMB14, or 0.4%, lower at RMB3,329 a metric tonne.

 

Soybean prices in Rotterdam were mostly lower as were soymeal prices. European vegoil prices were mostly unchanged to lower.

 

Crude palm oil futures on Bursa Malaysia Derivatives fell, but closed off lows on ideas exports have recovered. The benchmark May contract dropped MYR15 at MYR1,860 a metric tonne.