April 13, 2009

CBOT Soy Outlook on Monday: Seen down on overnight, outside pressure

Chicago Board of Trade soybean futures are poised to open lower Monday following a poor technical close Thursday, with additional pressure seen from weak outside markets.

May soybeans are called to open 3 to 6 cents per bushel lower. In overnight electronic trading, May soybeans slipped 4 1/2 cents to US$10.02 1/2.

The market had a "poor technical performance" Thursday as an early rally fizzled by the close of trading, said Don Roose, president of U.S. Commodities. Thursday's "low-range close does suggest the bulls are getting tired after the recent rally," a technical analyst said.

Soybeans are in a six-week-old uptrend on the daily bar chart, the technical analyst said. Soybean bulls still have the near-term technical advantage, although Thursday's close is "a worry," he said.

Expected weakness in equities and in crude oil should add pressure to soybeans, Roose said. Crude oil is linked to the soy complex because biodiesel is made from soyoil and funds trade in a basket of commodities.

On the weather front, it looks as though farmers "are going to have an open window" of improved conditions after this week, Roose said. Rains, especially south and east areas of the Midwest, will keep field work slow and delay any early planting this week, private weather firm DTN Meteorlogix said in a forecast.

Improved weather for corn planting could be supportive for soybeans as it may indicate that growers won't switch as many corn acres to soybeans, an analyst said. "Better planting weather, I guess, is the summation," Roose said.

The next upside price objective for bulls is to push and close CBOT May soybeans above solid technical resistance at US$10.69, the technical analyst said. The next downside price objective for the bears is pushing and closing the contract below solid technical support at US$9.80, he said.

First resistance for May soybeans is seen at US$10.24 and then at US$10.50. First support is seen at US$10.00 and then at US$9.90, the technical analyst said.