December 22, 2009

 

CBOT Soy Outlook on Tuesday: Up 2-3 cents; consolidating recent losses

 

 

Soybean futures at the Chicago Board of Trade are expected to start Tuesday's day session modestly higher, attempting to consolidate recent losses.

 

CBOT soybean futures are seen starting 2 to 3 cents higher. In overnight trade, January soybeans were 2 1/2 cents higher at US$10.03 1/2, and March soybeans were 2 cents higher at US$10.11 1/2.

 

Technical buying is seen buoying prices, with the absence of outside market pressure and traders' ideas that Monday's declines were overdone expected to underpin futures initially, analysts said.

 

However, "trading volume is beginning to diminish with only two full trading sessions remaining this week and activity could become very erratic during this time," said Midwest Market Solutions Brian Hoops in a morning market note. Expect choppy and two-sided trade this week, he added.

 

Bearish South American crop conditions are expected to limit upside movement, and traders expect Jan soybeans will hover around the US$10.00 strike price heading into Thursday's expiration of options on January futures.

 

Meanwhile, soybean processors are still having difficulty replacing crush supplies although the domestic soybean and export basis is declining which is putting soymeal values under pressure, according to a MF Global market note.

 

"Nonetheless, we caution against getting too bearish soybeans," MF Global said in the note. China is likely to continue buying US soybean cargoes on price setbacks further into 2010 than market bears might expect in the interest of diversifying supply sources and to protect against the next round of conflict between Argentine farmers and government," MF Global added in the note.

 

A technical analyst said first resistance for March soybeans is seen at US$10.20 and then at Monday's high of US$10.27 3/4. First support is seen at Monday's low of US$10.07 1/4 and then at US$10.00.

 

The DTN Meteorlogix weather forecast said major crop areas in Brazil will see increasing coverage of showers and thunderstorms during the next 3-5 days, maintaining favorable conditions for crops. In Argentina, periodic scattered shower and thundershower activity will maintain favorable growing conditions for most summer crops.

 

The U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11 a.m. EST. USDA, along with other federal agencies, were closed Monday because of the storm, which dumped heavy snow on the nation's capital. As a result, the weekly export inspections report, normally released on Mondays, was delayed until Tuesday.

 

CBOT markets will have a holiday shortened trading week, with markets closing at 1 p.m. EST Thursday, and remaining closed Friday in observance of the Christmas Day holiday.

 

In other news, China's soybean imports in November fell 13% on the year to 2.89 million metric tonnes, the General Administration of Customs said Tuesday. In the January-November period, soybean imports rose 11% to 37.77 million tonnes. China's December soybean imports are likely to rise on year to 4.59 million metric tonnes, the highest monthly imports this year, according to the latest report by the Ministry of Commerce.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled slightly higher Tuesday, continuing to consolidate as CBOT counterparts failed to lend support. The September 2010 soybean contract settled 0.2%, higher at RMB3,951 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange fell for the second day Tuesday on continued profit taking triggered by weakness in Chinese commodities and a stronger dollar. The March contract on the Bursa Malaysia Derivatives ended MYR40 or 1.6% lower at MYR2,515 a metric tonne.