March 10, 2009

Chicago Board of Trade soybean futures are expected to open 10 cents to 12 cents higher Tuesday on support from outside markets and short-covering, traders said.

 

In overnight trading, March soybeans were up 11 1/2 cents to US$8.29 1/2 per bushel, May soybeans were up 11 1/2 cents to US$8.76 1/2 and July soybeans were up 12 cents to US$8.75.

 

May soyoil was up 55 points to 31.31 cents per pound and May soymeal was up US$3.20 to US$268.20 per short tonne.

 

The overnight gains followed a late slump Monday, when the soybean market relinquished gains it had held for much of the day. Analysts said buying dried up as the market had a lack of fundamental direction.

 

"You're not seeing that much in the way of fundamental news ahead of tomorrow's report," said Brian Hoops, president of Midwest Market Solutions. The U.S. Department of Agriculture will release supply and demand estimates Wednesday at 8:30 a.m., EDT.

 

Hoops added that soybeans could follow corn, which has support from strength in the crude oil market. Traders add that a weaker dollar and apparent firmness in the equities should also support prices Tuesday.

 

"Without the drag from outside markets, it seems this sector is a little on the short side," a trader said.

 

Some traders say trade could be a little quiet headed into Wednesday's USDA report, but others expect a normal trading range.

 

The next upside price objective for the bean bulls is to push and close May prices back above psychological resistance at US$9.00 a bushel, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid technical support at last week's low of US$8.38 1/4 a bushel.

 

First resistance for May soybeans is seen at US$8.70 and then at US$8.80, the technical analyst said. First support is seen at US$8.60 and then at US$8.50.

 

There were no soybean or soymeal deliveries against the March future, while soyoil deliveries totaled 1,644.

 

In international markets, China's soybean futures traded on the Dalian Commodity Exchange settled slightly lower Tuesday, squaring off gains from Monday's trading session.

 

The benchmark September 2009 soybean contract dipped 0.2% to settle at RMB3,463 a metric tonne.

 

Dalian soybean could continue to consolidate in the near term as the market lacks direction from external factors, analysts said.