February 23, 2009

Soybean futures on the Chicago Board of Trade are seen starting Monday's day session higher, in step with the overnight theme, supported by oversold conditions and firm outside market influences.

 

CBOT soybean futures are called 15 cents to 18 cents higher.

 

In overnight electronic trading, March soybeans finished 18 1/2 cents higher at US$8.81, and May soybeans were 18 3/4 cents higher at US$8.82. May soymeal was US$5.80 higher at US$273.00 per short tonne, while May soyoil ended 41 points higher at 30.94 cents per pound.

 

The market is poised for a relief rally, buoyed by technically oversold conditions, stability in outside macro markets and exhausted selling interest, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

Commercial buying underneath the market, representative of firming cash basis levels is expected to support futures as well, Roose added.

 

A quiet news front will keep attention on outside equity and crude oil markets, with stabilizing crop conditions in South America less of an influence on prices.

 

Looking at technical charts, first resistance for May soybeans is seen at US$8.75 and then at Friday's high of US$8.91 1/4. First support is seen at Friday's low of US$8.54 1/4 and then at US$8.50.

 

The DTN Meteorlogix weather forecast said rain and storms hit major corn and soybean areas of Argentina's Cordoba, Sante Fe, N. Buenos Aires areas late last week. Showers were much less over La Pampa and in western Buenos Aires. Crops in those areas continue to suffer due to drought.

 

A recent trend towards less rain in northern Brazil will favor the harvest of early soybeans. However, the activity should pick up again early this week. Rainfall through the southern belt will favor pod filling soybeans, Meteorlogix said.

 

Index funds trimmed their net long positions in CBOT soybean futures and options. The combined number fell to 98,045 contracts from 98,297 the prior week, according to the Commodity Futures Trading Commission in its supplemental commitments of traders report released Friday.

 

Large speculative traders now hold 8,202 net long positions in CBOT soybean futures and options combined contracts as of Feb. 17, compared with net longs of 27,518 in the previous week, according to CFTC's supplemental report. Commercials held net short combined futures and options positions totaling 82,061 contracts, down from the previous week's 102,708 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.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Monday, rising with external markets. The benchmark September 2009 soybean contract settled RMB56, or 1.7% higher at RMB3,442 a metric tonne.

 

China's soybean imports in January fell 12% from a year earlier to 3.03 million metric tonnes, the General Administration of Customs said Monday. China is the world's biggest importer of soybeans and gets most of its supplies from the U.S., Brazil and Argentina, the world's leading soybean producers.

 

Crude palm oil futures on Malaysia's derivatives exchange traded higher tracking stronger soybean oil futures, said trade participants Monday. The benchmark May contract on the Bursa Malaysia Derivatives ended MYR45 higher at MYR1,880 a metric tonne.