Further Chart Improvement for Soybeans

April 14, 2009 07:00 PM

Julianne Johnston Pro Farmer Senior Markets Editor

From Pro Farmer

Updated as of 7:00 a.m. CT

Soybeans make further chart improvements... Soybean futures made further technical chart improvements yesterday, with May beans moving and closing above last week's high of $10.30 3/4 -- posting the highest close since early January. Next resistance lies at $10.69 -- the January 12 high. The contract could correct to around the $10.10 level without violating uptrending support.

Fundamental support is coming from tightening old-crop supplies and rumors of stepped up Chinese buying of U.S. beans. Traders are also noting disappointing Argentine soybean yields and the ongoing soybean export tax dispute, which is keeping importers headed to the U.S.

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

Corn: 1 to 2 cents lower. Futures saw light profit-taking overnight. Futures closed 5 to 6 cents higher yesterday, which was near the middle of the day's trading range. Corn was boosted by corrective short-covering amid ideas recent losses were overdone. Corn also got a strong boost from soybeans, which posted double-digit gains. Short-term trading boundaries for May corn futures extend from the March 30 low at $3.76 3/4 to the April 2 high at $4.07 1/2.

Soybeans: 4 to 5 cents higher. Futures were slightly higher overnight to improve on yesterday's strong performance. Futures closed 12 to 15 cents higher, with meal and soyoil seeing strong spillover support.  Front-month soybean futures have moved to their highest level since late January, supported by tightening supplies and rumors of stepped up Chinese buying of U.S. beans.

Wheat: 3 to 5 cents higher. Futures were higher overnight on spillover from soybeans and due to short-covering. Futures saw a choppy day of trade yesterday, seeing periods of spillover from corn and soybeans, while upside potential was limited by the overall bearish outlook. Chicago wheat closed mostly 1/4 to 1 cent lower. July Chicago wheat briefly penetrated resistance at the previous day's high, but posted a low-range close. Support lies at Monday's low of $5.27 1/4 and extends to the $5.13 3/4.

Cash cattle expectations: Watching beef market. The beef market has posted back-to-back strong performance to start the week. Choice values were up $2.35 and Select rose $2.53 yesterday. Movement of 189 loads is decent, but needs to strengthen in order to give feedlots the upper hand due to this week's larger showlist.

Futures call: Mixed. Futures closed moderately to sharply lower yesterday and finished near session lows. Futures extended losses throughout the session on pressure from the stock market. The Dow Jones Industrial Average was more than 100 points lower as cattle futures closed. There is also some trepidation toward the cash cattle market. Even though beef prices continue to firm, there's some skepticism that packers will continue to raise cash cattle bids as margins are solidly in the red.

Cash hog expectations: Steady to firmer. The cash hog market is called steady to firmer as some packers are in need of supplies. Pork cutout values were up 67 cents yesterday to help profit margins remain in the black. After a prolonged spell in the red, packers will want to see margins remain in the black.

Futures call: Mixed. Futures extended losses to close 85 cents to $2.15 lower yesterday. Early pressure came on spillover from the equity markets, as the U.S. stock market faced pressure amid disappointing retail sales data for March. Futures were also pressured ahead of today's noon, CT expiration of April hogs. The CME lean hog index is projected down 25 cents to stand at $56.71 tomorrow and April hogs are still trading at around a dollar premium to the index.

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