March 3, 2009

Chicago Board of Trade soybean futures are expected to start Tuesday's session posting modest gains, in step with the overnight theme amid signs of stability in outside financial markets.

 

CBOT soybean futures are called 2 cents to 3 cents higher.

 

In overnight electronic trading, March soybeans finished 2 3/4 cents higher at US$8.51 1/4, and May soybeans were 3 1/2 cents higher at US$8.47 1/2. May soymeal was US$0.30 lower at US$260.50 per short tonne, while May soyoil ended 22 points higher at 30.56 cents per pound.

 

A slight recovery in stock indexes overnight from Monday's plunge to 12 year lows, a weaker U.S. dollar and a bounce in crude oil futures will lend strength to support prices, analysts said.

 

A quiet news front continues to keep traders focused on the broader economic climate, as traders take a cautious role in the uncertain outlooks for the global economy and its impact on world demand, analysts added.

 

Traders will also eye developments in the Argentina farmer and the government's disagreements on export taxes, a CBOT floor broker said. Meanwhile, a slowing export pace and an expected shift in Chinese buying shifting to South America is seen limiting upside movement.

 

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 the contract low of US$7.86 1/2 a bushel.

 

First resistance for May soybeans is seen at US$8.50 and then at Monday's high of US$8.72. First support is seen at Monday's low of US$8.38 1/4 and then at US$8.25.

 

The DTN Meteorlogix weather forecast said rainfall in Argentina this week will continue to improve the outlook for late planted and second crop soybeans. In Brazil, a turn towards drier and hotter weather in the northern growing areas will favor the soybean and corn harvests. A trend towards more rain in Rio Grande do Sul will favor pod filling soybeans in that location.

 

In other news, Argentina is preparing plans to broaden state intervention in agrarian markets, trying to tighten the screws on dissident farmers who are already unhappy about high export taxes. Farmers, hammered by falling prices and drought, will meet Tuesday with government negotiators to discuss their grievances over agrarian policy.

 

March soyoil deliveries totaled 1,724 lots. A customer account at Man Professional Clearing was the primary issuer of 688 lots. A customer account at ADM Investor Services stopped 1,191 lots. The last trade date assigned was March 2.

 

March soymeal deliveries totaled one lot. A customer account at Rosenthal issued the lot, while a customer account at R.J. O'Brien stopped the one lot. The last trade date assigned was Dec. 30.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled slightly lower Tuesday, tracking Monday's soybean declines at CBOT. The benchmark September 2009 soybean contract declined 0.7% to settle at RMB3,372 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended slightly lower in range bound trade Tuesday, but the likelihood of inventories having fallen to 14-month lows capped losses. The benchmark May contract on the Bursa Malaysia Derivatives ended MYR16 lower at MYR1,855 a metric tonne after.