December 30, 2009

 

CBOT Soy Outlook on Wednesday: Lower as dollar weighs; more China demand

 

 

Chicago Board of Trade soybeans are expected to open lower Wednesday as the market retreats following Tuesday's gains, with a stronger dollar weighing.

 

Soybeans are called 5 to 7 cents lower. In overnight trade, January soybeans were down 7 3/4 cents to US$10.30 1/4 per bushel and March soybeans were down 8 cents to US$10.39.

 

March soyoil was down 8 points to 39.77 cents per pound and March soymeal was down US$1.30 to US$306.30.

 

Light-volume holiday trade could make price action choppy, analysts said.

 

"January deliveries loom for the soy complex which along with weekly export sales data will direct prices headed into the holiday weekend," AgResource Co. said in a morning commentary.

 

First notice day for January contracts is Thursday.

 

Traders note that demand has been strong recently, as China continues to be a strong buyer. That demand continued Wednesday, as private exporters reported to the U.S. Department of Agriculture export sales of 348,000 metric tonnes of soybeans for delivery to China so far during the 2009/2010 marketing year, the USDA said.

 

The trade is closely watching the crop situation in South America, which is the United States' main competitor. Weather there has mostly been favorable to the crop, which is bearish for prices in Chicago.

 

In other news, analysts say that Taiwan passed on a tender for U.S. or South American soybeans. AgResource said they cited high prices, and were expected to retender on Thursday.

 

If March soybeans extend this week's rally, US$10.59 1/2 is the next upside target, a technical analyst said. Closes below the 10-day moving average crossing at 10.28 3/4 would temper the near-term friendly outlook in the market.

 

First resistance is Tuesday's high of US$10.49. Second resistance is seen at US$10.59 1/2. First support is seen at US$10.16. Second support is seen at US$9.93.

 

In other markets, Soybean futures fell slightly on the Dalian Commodity Exchange Wednesday on a technical retreat while still tightly tracking the Chicago Board of Trade.

 

The benchmark September 2010 soybean contract settled RMB10 or 0.2% lower at RMB4,013 a metric tonne.

 

Malaysian palm oil prices were higher overnight, analysts added.