November 24, 2009

CBOT Soy Outlook on Tuesday: Down 2-4 cents on profit taking pressure

Soybean futures at the Chicago Board of Trade are expected to start Tuesday's day session lower, following the overnight theme, with profit taking from prior gains ahead of the holiday featured.

CBOT soybean futures are seen starting 2 cents to 4 cents lower. In overnight trade, January soybeans were 4 cents lower at US$10.38, and March soybeans were 4 cents lower at US$10.43 3/4.

A lack of clear direction from outside markets and bearish technical signals from Monday's stumble is expected to attract speculative profit taking pressure, analysts said.

The U.S. dollar index in posting marginal losses, crude oil is hovering near unchanged levels while metals are mixed and U.S. equity futures are higher in early action.

A quiet news front is seen adding to the defensive theme, with traders booking profits on overbought market signals following a more than 6% jump in prices during the past two-weeks.

Farmer selling is another bearish feature for prices as producers from the U.S. and South America are locking in favorably higher prices, analysts said.

However, "a choppy atmosphere will most likely continue, with traders on guard for any speculative fund buying push, while remaining fearful of a price setback if the market's uptrend continues to falter at August highs on technical charts," a CBOT floor analyst said.

A technical analyst said first resistance for January soybeans is seen at last week's high of US$10.50 and then at US$10.68. First support is seen at Monday's low of US$10.38 and then at the October high of US$10.29 1/4.

As of Sunday, 94% of the U.S. soybean crop was harvested, up from 89% last week but below the five-year average of 97%, U.S. Department of Agriculture reported Monday. That was within trade expectations of about 92% to 98%.

Harvest is wrapping up in Iowa, where 98% of the crop was combined, and in Indiana, where 97% was combined, the USDA said. In Illinois, soybeans were 95% harvested, below the average of 99%.

The T-storm Weather forecast said light rain will develop and move across the corn-belt through tonight. Seasonably cold weather follows the rain, though a warm-up occurs this weekend. A large storm is increasingly likely to bring rain and or snow to the eastern corn-belt from Sunday to Tuesday, T-storm Weather said.

Soil moisture will improve across Argentina corn and soybean areas over the next few days. Too much rain with localized flooding is expected in Entre Rios and parts of southern Brazil, T-storm Weather added.

CBOT markets will be closed Thursday in observance of the Thanksgiving Day holiday. The market will reopen with Thursday nights overnight session and trade an abbreviated day session Friday. The market will close at 1 p.m., EST, Friday.

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Tuesday, as commodities and equities fell in a correction of recent gains. The benchmark September 2010 soybean contract settled RMB10 a metric tonne lower at RMB3,872/tonne. China's soybean imports in December will likely rise compared with November to 2.96 million metric tonnes, but fall on year, according to a Ministry of Commerce report. The country imported 3.3 million tonnes of soybeans last December.

Crude palm oil futures prices on Malaysia's derivatives exchange ended lower Tuesday, as investors took profits following lackluster trade overnight in crude oil and soyoil futures, trade participants said. The February contract on the Bursa Malaysia Derivatives exchange ended MYR8 lower at MYR2,478/tonne.