June 3, 2009

CBOT Soy Outlook on Wednesday: Down 7-10 cents; profit taking correction

Soybean futures on the Chicago Board of Trade are poised for a lower start to Wednesday's day session, with traders anticipating a modest correction from recent gains.

CBOT soybean futures are seen opening 7 cents to 10 cents lower, with soy product futures following overnight price action.

The combination of overbought market conditions, a lack of fresh demand news and bearish outside market influences are expected to weigh on prices in early action, said Jason Roose, analyst with U.S. Commodities.

The U.S. dollar is showing signs of finding support, planting progress in moving along and lingering fears of China canceling prior U.S. soy purchases are expected to limit buying interest, particularly with prices at historically high values, Roose added.

The absence of fresh export news to support an upward push in prices is seen promoting a consolidation theme, while tight old crop stocks and uncertain new crop production remain underpinning features to limit downside risks.

A technical analyst said first resistance for July soybeans is seen at Tuesday's high of US$12.21 3/4 and then at this week's high of US$12.27. First support is seen at US$12.00 and then at this week's low of US$11.85 3/4.

DTN Meteorlogix Weather said rainfall in the western Midwest will favor developing corn and soybeans with planting complete in many areas, although parts of South Dakota and Minnesota could actually use more rain at this time. Rainfall in the eastern Midwest will continue to disrupt and delay planting, although progress is being made during episodes of drier weather.

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Wednesday, as traders took profits on recent gains. The benchmark January 2010 soybean contract settled RMB11 a metric tonne lower at RMB3,746/tonne.

Crude palm oil futures on Malaysia's derivatives exchange ended lower in volatile trade Tuesday on profit-taking, estimates of a rise in production and spillover pressure from soyoil, said trade participants. The benchmark August contract on Bursa Malaysia Derivatives ended MYR27 lower at MYR2,598 a metric tonne.