December 1, 2009

CBOT Soy Outlook on Tuesday: Up; following overnight theme, dollar weakness

Soybean futures on the Chicago Board of Trade are expected to start Tuesday's day session on firm footing, following the overnight theme on support from a weak dollar.

CBOT soybean futures are seen starting 7 to 10 cents higher. In overnight trade, Jan soybeans were 9 1/2 cents higher at US$10.70, and March soybeans were 10 cents higher at US$10.76.

Traders anticipate speculative fund buying will continue to underpin prices, with a lower U.S. dollar coupled with solid export demand underlying drivers of prices, analysts said.

Higher crude oil futures and metals are positive buy signals for the market as well, with traders expecting investment money will buoy prices as funds continue to allocate money into commodities in general, a CBOT floor analyst said.

Otherwise, a quiet news front leaves sellers without fresh motivation, but favorable near-term South American crop conditions and overbought signals open the door for profit taking setbacks on the exhaustion of upside movement.

A technical analyst said first resistance for January soybeans is seen at Monday's high of US$10.69 1/4 and then at US$10.80. First support is seen at Monday's low of US$10.50 1/2 and then at US$10.40.

U.S. farmers have harvested 96% of their soybean crops as of Sunday, up from 94% last week and below the average of 98%, the U.S. Department of Agriculture said Monday.

The harvest progress didn't provide anything exciting for the market to digest, just a reflection that the harvest is coming to an end, said Mario Balletto, analyst with Citigroup in Chicago.

The harvest is winding down in Iowa, where 99% of the crop was combined, and in Indiana, where 99% was combined, the USDA said. In Illinois, soybeans were 96% harvested, below the average of 100%.

December soyoil deliveries totaled 634 lots. The house account at Tenco issued 304 lots while customer accounts at ADM Investor Services and Man Professional Clearing stopped 310 and 270 lots respectively. The last trade date assigned was November 25.

In other news, soy farmers in Brazil's No. 1 soy-producing state, Mato Grosso, have finished planting their upcoming 2009-10 crop, consultant Celeres said in a weekly report. Farmers in Mato Grosso planted 100% of their soy as of Nov. 27, Celeres said. This compared with 98% on Nov. 20 and 97% a year earlier, the report said.

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled slightly lower Tuesday as buyers sold positions due to arbitrage needs. The benchmark September 2010 soybean contract settled RMB2 lower at RMB4,028 a metric tonne.

Crude palm oil futures on Malaysia's derivatives exchange ended up Tuesday in thin, volatile trade as a lack of market participants allowed prices to be pushed around easily, traders said. The benchmark February contract on the Bursa Malaysia Derivatives exchange ended MYR23 higher at MYR2,495 a metric tonne.