February 25, 2009

Chicago Board of Trade soybean futures are poised for a higher start to Wednesday's day session, following the overnight theme, as the market attempts to find stability in the absence of fresh news.

 

CBOT soybean futures are called 2 cents to 4 cents higher.

 

In overnight electronic trading, March soybeans finished 3 1/4 cents higher at US$8.84 1/4, and May soybeans were 3 1/2 cents higher at US$8.87. May soymeal was US$0.20 higher at US$275.20 per short tonne, while May soyoil ended 31 points higher at 31.11 cents per pound.

 

A dearth of fresh ag news sets the stage for a directionless theme, with traders eyeing outside markets for leadership, analysts said.

 

With South American crops in the home stretch of development and uncertainty surrounding the global economy, traders are expected to maintain a cautious approach, until more definitive news is available to direct prices, analysts added.

 

The trade will look for signs of financial markets building some confidence following President Barack Obama's speech on the economic recovery plans, a CBOT floor analyst said. However, with conflicting bullish and bearish underlying features, choppy two-sided action maybe on tap, he added.

 

Acreage will begin to step into the forefront of market attention moving forward, with the trade awaiting early planting indications from U.S. Department of Agriculture's Outlook Forum that starts Thursday.

 

Looking at technical charts, the next upside price objective for May soybeans is to push and close prices back above psychological resistance at US$9.00 a bushel, a technical analyst said. The next downside price objective is pushing and closing prices below solid technical support at last week's low of US$8.54 1/4 a bushel. First resistance for March soybeans is seen at US$8.85 and then at this week's high of US$8.95 3/4. First support is seen at Tuesday's low of US$8.68 and then at this week's low of US$8.61 1/4.

 

The DTN Meteorlogix weather forecast said a recent trend towards less rain in northern Brazil will favor the harvest of early soybeans. However, thunderstorms are back in the region Wednesday, with the heaviest over Mato Grosso. Rainfall through the southern belt will favor pod filling soybeans.

 

Argentina farm unions ended a five-day strike Tuesday and sat down with government officials for the first time in a nearly year-long struggle over export taxes that farmers say, together with a drought, are choking off their profits.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday, supported by stable cash prices. The benchmark September 2009 soybean contract settled RMB47 higher at RMB3,508 a metric tonne, after trading between RMB3,475-RMB3,540/tonne.

 

Meanwhile, China is expected to import 2.63 million metric tonnes of soybeans in February, according to an initial estimate report by the Ministry of Commerce. The estimate was based on importer reports during Feb. 1-15, and the regular forecast is usually lower than actual amount as it doesn't include all cargoes.

 

Crude palm oil futures on Malaysia's derivatives exchange traded higher Wednesday on strong exports but worries about a narrowing discount between soyoil and palm oil limited gains, said trade participants. The benchmark May contract on the Bursa Malaysia Derivatives ended MYR23 higher at MYR1,894 a metric tonne.