February 20, 2009

Soybean futures on the Chicago Board of Trade are poised for a lower start Friday, extending the recent down trend on bearish outside market influences and a lack of fresh bullish news, analysts said.

 

CBOT soybean futures are called 8 cents to 12 cents lower.

 

In overnight electronic trading, March soybeans finished 13 1/4 cents lower at US$8.71 1/4, and May soybeans were 13 cents lower at US$8.73. March soymeal was US$3.80 lower at US$272.70 per short tonne, while March soyoil ended 31 points lower at 30.11 cents per pound.

 

The lower overnight theme is seen continuing into day session trade, with a firmer U.S. dollar, lower crude oil futures and weakness in stock indexes painting a bearish picture, analysts said.

 

Grim economic outlooks continues to keep buyers sidelined, with a weak technical picture and beneficial rains in some Argentina growing areas expected to weigh on prices, analysts added.

 

However, oversold market conditions, supportive weekly export sales and the potential for added U.S. export business if an Argentina farmers strike lingers on is seen limiting downside movement.

 

Looking at technical charts, first resistance for May soybeans is seen at Thursday's high of US$9.01 1/4 and then at US$9.09. First support is seen at Thursday's low of US$8.82 3/4 and then at US$8.75.

 

The U.S. Department of Agriculture reported total weekly soybean export sales were a net 1,180,200 metric tonnes for the week ended Feb. 12. Sales for 2008-09 were a net 1,094,200 metric tonnes. Analysts had forecast sales between 600,000 and 900,000 metric tonnes. The primary buyer was China with 873,600 metric tonnes.

 

Soymeal sales were a net 142,700 tonnes. Trade estimates ranged from 125,000 to 225,000 tonnes. Soyoil commitments were 46,100 metric tonnes. Analysts had forecast sales between 10,000 and 30,000 tonnes.

 

The DTN Meteorlogix weather forecast said rain and storms in Argentina Friday will end the most recent heat wave. Rain is especially beneficial to late planted and double crop soybeans, however some important crop areas in La Pampa may only see light rains.

 

In Brazil, Drier, hotter weather through the northern belt will help improve conditions for the early harvest...following the heavy rains of the past weekend, Meteorlogix said. Heavy storms in Rio Grande do Sul will be mostly favorable for soybean crops, except possibly in areas of local flooding, Meteorlogix added.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Friday as traders covered short positions ahead of the weekend. The benchmark September 2009 soybean contract settled RMB57, or 1.7%, higher at RMB3,386 a metric tonne. Cash soybean prices in China's major producing areas were mostly lower in the week to Friday, pressured by tumbling prices in the futures market.

 

Crude palm oil futures on Malaysia's derivatives exchange shed intraday gains and ended lower for the fifth successive day Friday on a selloff across other asset classes including crude oil and concern over a narrowing discount to soyoil. The benchmark May contract on Bursa Malaysia Derivatives ended MYR25 lower at MYR1,835 a metric tonne, off an intraday high of MYR1,889.