March 6, 2009

Chicago Board of Trade soybean futures are expected to start Friday's day session higher, finding support from outside markets and firm cash basis levels.

 

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

 

In overnight electronic trading, March soybeans finished 12 1/2 cents higher at US$8.75, and May soybeans were 4 cents higher at US$8.56. May soymeal was US$0.60 higher at US$261.90 per short tonne, while May soyoil ended 14 points higher at 30.85 cents per pound.

 

With outside crude, metal and stock markets a little higher in early action and the U.S. dollar lower, futures have support from the financial sector, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The underlying catalyst for the gains are firm cash basis levels in the U.S. and Brazil, as farmers remain reluctant sellers at lower price levels, Roose added.

 

Futures are poised for a short covering bounce heading into the weekend following Thursday's slide near recent lows, traders said.

 

Nevertheless, the economy remains a concern to traders, with high unemployment and its effect on demand expected to limit upside potential.

 

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 market technician said. The next downside price objective is pushing and closing prices below solid technical support at this week's low of US$8.38 1/4 a bushel.

 

First resistance for May soybeans is seen at US$8.60 and then at US$8.70. First support is seen at Thursday's low of US$8.43 and then at US$8.38 1/4.

 

The DTN Meteorlogix weather forecast said this week's heavy rains will continue to improve the outlook for Argentina's late planted and second crop soybeans.

 

In Brazil, cooler temperatures and a few showers in Rio Grande do Sul will favor filling soybeans, after recent hot weather. Hot, dry weather in the north will favor maturing crops and harvests until showers return to the region.

 

March soyoil deliveries totaled 2,108 lots. Customer accounts at Man Professional Clearing issued 1,167 lots and stopped 1,231 lots. The last trade date assigned was March 5.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled slightly lower Friday, consolidating off Thursday's gains amid a lack of direction from outside markets. The benchmark September 2009 soybean contract declined 0.3% to settle at RMB3,433 a metric tonne.

 

Crude palm futures on Malaysia's derivatives exchange rose as much as 2.5% to an 18-day high Friday after the country's output projections were lowered and tracking the government's bullish price outlook, trade participants said. The benchmark May contract on the Bursa Malaysia Derivatives ended MYR34 higher at MYR1,940 a metric tonne.