November 17, 2009

 

CBOT Soy Outlook on Tuesday: Lower, follow overnight, lack outside support

 

 

Soybean futures on the Chicago Board of Trade are expected to start Tuesday's day session on the defensive, following the overnight theme amid the absence of fresh supportive influences.

 

CBOT soybean futures are seen starting 3 to 5 cents lower. In overnight trade, January soybeans were 4 cents lower at US$10.06, and March soybeans were 4 1/4 cents lower at US$10.11 1/2.

 

"The outside markets are not commodity friendly today, with a recovery in the U.S. dollar and weakness in metals and crude oil weighing on prices," said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The market ran into technical chart resistance Monday and with world markets not following Monday's CBOT rally, the stage is set for a profit-taking setback, Roose added.

 

The market managed to overlook bearish supply side fundamentals Monday, but without support from outside markets, buyers are a bit cautious in the face of a record U.S. harvest and improved planting conditions in Argentina.

 

Otherwise, futures have little fresh news to digest, but strong underlying demand and firming cash basis levels will provide price support.

 

A market technician said first resistance for January soybeans is seen at Monday's high of US$10.11 3/4 and then at the November high of US$10.22 1/2. First support is seen at US$10.00 and then at Monday's low of US$9.91 1/2.

 

U.S. Department of Agriculture said the U.S. soybean harvest was 89% complete as of Sunday, up from 75% the prior week but below the five-year average of 96%. Traders had pegged the progress at 90%.

 

"Most major soybean producing states remain behind normal pace but significant advances were made with last week's dry weather," Benson Quinn Commodities analyst Kim Rugel said in a market commentary.

 

The DTN Meteorlogix Weather forecast said rain from the southern part of the western Midwest through much of the eastern Midwest will further delay the summer crop harvest, while cool, damp conditions will slow harvest progress for soybeans in the Delta.

Improved conditions for wheat, corn and soybeans is on tap for most areas of Argentina due to near to above normal rainfall and only brief hot spells, Meteorlogix said.

 

In other news, CBOT will change the settlement procedures for agriculture futures, starting Dec. 1, the CME Group said in an advisory note released Tuesday. The settlement procedure for the soy complex futures will be modified to where lead months will settle based on estimated volume-weighted average price established in the pit during the closing range, the note said.

 

The first two contract months other than the lead contract months will settle to spread relationships established in the pit, while remaining contract months will settle upon spread relationships established on electronic system at 1:15 p.m. CST.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled little changed Tuesday, as traders took profits from earlier gains. The benchmark September 2010 soybean contract settled RMB1 higher at RMB3,779 a metric tonne.

 

Crude palm oil futures prices on Malaysia's derivatives exchange were little changed Tuesday, with investors taking profit after prices were unable to sustain early gains due to a pullback in crude and soyoil prices in Asia. The February contract on the Bursa Malaysia Derivatives ended MYR6 higher at MYR2,342 a tonne.