Beans Close Above $9.00

March 17, 2009 07:00 PM

Julianne Johnston Pro Farmer Senior Markets Editor

From Pro Farmer

Updated as of 7:00 a.m. CT

Back-to-back closes above $9.00... May and July soybeans posted back-to-back closes above $9.00 yesterday to make a stronger case a near-term low has been posted. If the slightly improved technical situation can continue to build on itself, it would reopn upside potential to around $9.50 and eventually $10.00. However, if futures slip back below the $9.00 level, it could reopen downside risk. Key will be how outside markets perform, as strength in crude oil is bringing some confidence back into the bean pit.

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Opening calls. These calls originate more than three hours before the open -- use caution, things change:

Corn: Steady to 1 cent lower. Futures were choppy overnight, favoring a weaker tone. Futures closed steady to 1 cent lower yesterday after seeing two-sided trade. The inability of corn to find spillover from neighboring pits or outside markets is not a positive sign, although no technical chart damage was done. May corn futures posted an inside day of trade on the daily price chart, but remains in the uptrend from the March 2 low. That trendline, along with the 40-day Moving Average (at $3.76 3/4 today), stand as near-term support. To the upside, Monday's high at $3.97 1/2 and the psychological $4.00 mark must be cleared to extend short-term upside momentum.

Soybeans: Steady to 3 cents higher. Futures were firmer overnight on spillover support. Futures saw two-sided trade, but closed 2 to 12 cents higher, with deferreds leading gains. Soybeans saw spillover from yesterday's strong gains, with outside markets supportive for the bean pit. Crude oil futures were sharply higher, which provided much of the spillover support, with strength in the Dow Jones Industrial Average also supportive for the grain markets. Floor sources were also noting some "value buying" in the market, with investors saying soybeans were relatively "cheap" compared to markets like gold.

Wheat: 1 to 2 cents lower. Futures saw light profit-taking pressure overnight. Futures were slightly higher after a choppy start, closing mostly 6 to 8 cents higher. Wheat was supported by outside markets, as the Dow Jones Industrial Average is starting to bring some confidence back to the grain market. May Chicago wheat posted an upside day of trade on the chart to post its first close above the $5.50 level since mid-February. Next resistance lies at the February high of $5.89 3/4.

Cash cattle expectations: Lackluster start to beef market. Boxed beef prices were unable to hold morning gains and finished 14 cents higher to 41 cents lower Tuesday on movement of only 212 loads. Given the sluggish beef trade this week, hopes of higher cash cattle bids in the Plains appear limited unless cattle futures strengthen enough to encourage firmer cash bids.

Futures call: Mixed. Futures are called to open mixed after yesterday's choppy price performance, with traders waiting on clearer cash signals. April live cattle futures remain locked in the downtrend from the fall and winter highs. Until this trendline is broken and the last reaction high at $86.37 is cleared, traders will sell price strength. To the downside, the contract low at $82.00 is initial support.

Cash hog expectations: Steady to lower. Demand for cash hogs will remain limited despite cutting margins moving into the black, as packers have this week's needs mostly secured. There's a chance some plants may ramp up late-week slaughter plans if margins continue to improve, but that likely wouldn't impact the cash hog market until Friday.

Futures call: Mixed. Futures closed mixed amid bears spreading yesterday. Nearbys were pressured by weakness in the cash market, while downside risk was limited by positive outside markets. There is still more downside risk for nearby hogs, as April hogs are trading at around a $2 premium to the CME lean hog index.  June hogs penetrated support at Monday's low, but bounced off uptrending support drawn off the February and March reaction lows and posted a high-range close.

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