April 7, 2009

 

CBOT Soy Outlook on Tuesday: Down slightly on outside market pressure

 

 

Chicago Board of Trade soybeans are expected to open weaker Tuesday amid pressure from outside markets, including a stronger dollar, analysts said.

 

Soybeans are called 1 to 3 cents lower. In overnight trade, May soybeans were flat at US$9.94 per bushel and July soybeans were down 1/2 cent to US$9.93. May soyoil was up 6 points to 35.05 cents per pound and May soymeal was down US$0.10 to US$306.30 per short tonne.

 

Traders will likely be cautious about buying Tuesday, given a stronger dollar and expected weakness Tuesday in equities and crude oil, analysts said.

 

"The bias of the money I think is to the long side, but there's no sense of urgency. they can afford to patient and see how the outside markets are working out," said Arlan Suderman, analyst for Farm Futures.

 

The cautious tone is in part due to the upcoming crop report, Suderman said. The U.S. Department of Agriculture will issue a supply and demand report Thursday at 8:30 a.m. EDT.

 

Analysts say the market remains underpinned by concerns about tightening old crop stocks in the face of strong exports and declining Argentina crop production forecasts. Those factors supported old crop versus new crop contracts Monday.

 

Although Suderman said the fundamentals are supportive, the nearby May contract still has to prove it can hold above US$10.

 

"I think soybeans need to establish themselves above US$10 this week, or they run significant risk of seeing some profit-taking pushing them down," he said.

 

Some traders say that outside markets, including equities, are due for a correction, and that the shaky economy should continue to weigh on prices.

 

In other news, Brazil should harvest 58.1 million metric tonnes of soybeans in the 2008-09 crop year, the National Commodities Supply Corp, or Conab, said Tuesday.

 

The number is slightly above Conab's previous estimate in March that put the soy crop at 57.6 million tonnes for 2008-09 compared to 60 million tonnes from the 2007-08 soy crop.

 

The next upside price objective for the bean bulls is to push and close May prices above solid technical resistance at the January high of US$10.24 a bushel, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid technical support at US$9.40 a bushel.

 

First resistance for May soybeans is seen at US$10.00 and then at Monday's high of US$10.09, the technical analyst said. First support is seen at Monday's low of US$9.83 and then at US$9.72.

 

In other markets, crude palm oil futures on Malaysia's derivatives exchange ended higher Tuesday, rising above MYR2,200 a metric tonne for the first time in more than six months after the government said there was a further drawdown in inventories in March.

 

The benchmark June contract on Bursa Malaysia Derivatives ended MYR35 higher at MYR2,180/tonne after reaching an intraday high of MYR2,201.

 

Also, China's soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday, tracking strong gains in external markets.

 

The benchmark September 2009 soybean contract settled 0.6% higher at RMB3,608 a metric tonne.