December 15, 2009

 

CBOT Soy Outlook on Tuesday: Down 3-5 cents, consolidating gains, firm dollar

 

 

Soybean futures at the Chicago Board of Trade are expected to begin Tuesday's day session with modest declines, consolidating Monday's strong gains.

 

CBOT soybean futures are seen starting 3 to 5 cents lower. In overnight trade, January soybeans were 2 3/4 cents lower at US$10.52 1/4, and March soybeans were 3 1/2 cents lower at US$10.58 1/4.

 

The absence of fresh supportive news is expected to attract profit taking pressure on trader ideas Monday's advances were overdone, analysts said.

 

Strength in the U.S. dollar in early Tuesday trade is a bearish outside market influence, with favorable crop and planting conditions in South America seen extending the lower overnight theme.

 

Traders remain concerned about the potential for export demand to shift to Brazil and Argentina barring a weather problem in South America.

 

Nevertheless, bullish demand fundamentals remain an underpinning feature, and with traders anticipating a fund-reallocating buying push heading into the New Year, sellers continue to take a cautious approach, analysts said.

 

"The market has some bearish features to weigh on prices, but if sellers don't show up, the path of least resistance is higher and sellers will run for cover," said Victor Lespinasse, analyst with Grainanalyst.com.

 

A technical analyst said first resistance for January soybeans is seen at Monday's high of US$10.59 and then at US$10.63 3/4. First support is seen at US$10.50 and then at US$10.40.

 

The DTN Meteorlogix weather forecast said a favorable weather pattern is on tap for Brazil soybeans from Parana northward as periodic showers continue and there is no significant hot weather in sight. It may still be too wet in Rio Grande Do Sul, however, there may be enough dry weather between rain events to allow for some progress in fieldwork.

 

In Argentina, Increasing shower activity later this week will favor developing crops while causing only minor planting delays, Meteorlogix forecast.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday as traders seized yesterday's fall as an opportunity to buy. The September 2010 soybean contract settled RMB48 higher at RMB4,017 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended slightly higher Tuesday, off highs as supportive outlooks by industry analysts were offset by lower soyoil and crude oil prices and by profit taking, trade participants said. The February contract on BMD ended 0.5% higher at MYR2,525 a metric tonne.