February 27, 2009

Soybean futures on the Chicago Board of Trade are poised for a lower start to Friday's day session, with downside pressure fueled by bearish economic outlooks.

 

CBOT soybean futures are called 10 cents to 15 cents lower.

 

In overnight electronic trading, March soybeans finished 13 1/4 cents lower at US$8.56, and May soybeans were 15 cents lower at US$8.53 1/2. May soymeal was US$3.20 lower at US$260.00 per short tonne, while May soyoil ended 44 points lower at 31.49 cents per pound.

 

A quiet news front is expected to keep traders focused on outside financial markets for direction, with weakness in crude oil, falling stock indexes and a firmer U.S. dollar - bearish indicators for early price movement, analysts said.

 

Otherwise, the market will key on technical factors and end of the week positioning with stabilized South American crop conditions and talk of slowing demand already factored into prices, analysts added.

 

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. 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 May soybeans is seen at US$8.80 and then at Thursday's high of US$8.91. First support is seen at Thursday's low of US$8.58 and then at US$8.54 1/2.

 

U.S. 2009-10 soy planted area is estimated at 77 million acres and production is seen at 3.24 billion bushels, according to the U.S. Department of Agriculture, which released its grains and oilseeds outlook Friday at its annual Agricultural Outlook Forum.

 

The USDA said soy yields this year are seen at 42.6 bushels per acre. Regarding demand, the government said soybean crush would be around 1.67 billion bushels while exports are seen at 1.225 billion bushels. Ending stocks for 2009-10 are seen at 380 million bushels.

 

In other news, Argentina's two leading papers are reporting that the government is considering a complete takeover of the commercialization of grains amid tense negotiations between farmers and the government to avoid a repeat of last year's crippling farm strikes.

 

La Nacion and Clarin both said in front page articles Friday that a plan to transfer control of all purchases and exports to the agricultural trade office was under study. However, a government source denied Friday any knowledge of the plan.

 

March soymeal deliveries totaled 2 lots. A customer account at Banc of America Securities issued the lots, while a customer account at R.J. O'Brien stopped the lots. The last trade date assigned was Nov. 7.

 

March soyoil deliveries totaled 2.394 lots. A customer account at ADM Investor Services issued 1,928 lots. A customer account at Man Professional Clearing was the primary stopper of 1,070 lots. The last trade date assigned was Feb. 19.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Friday, pressured by weakness in broader financial markets. The benchmark September 2009 soybean contract declined 2.3% to settle at RMB3,392 a metric tonne.

 

Cash soybean prices in China's major producing areas rose in the week to Friday, buoyed by tightening physical stocks as the government nears the end of its stockpiling exercise.

 

Crude palm oil futures on Malaysia's derivatives exchange ended off highs Friday on expectations of an 8%-12% fall in exports this month, after moving both ways in volatile trade. The benchmark May contract on Bursa Malaysia Derivatives ended MYR5 higher at MYR1,895 a metric tonne.