CHICAGO (Dow Jones)--Chicago Board of Trade soybeans are expected to open lower Wednesday following overnight losses and continued pressure from bearish South American crops.
Soybeans are called 4 to 6 cents lower. In overnight trade, March soybeans were down 6 1/2 cents to $9.41 per bushel and May soybeans were down 6 3/4 cents to $9.50 1/4.
March soymeal was down $2.30 to $285.10 per short ton and March soyoil was down 28 points to 36.49 cents per pound.
After climbing Tuesday, the market "failed to sustain a short covering rally" overnight, AgResource Co. said in a morning commentary.
South American supplies are overhanging the market, as favorable weather prompts predictions of very large crops there, which will mean increased competition with the U.S. for export business, analysts say.
Although Argentina has had a dry spell lately, analysts note that crops there are forecast to get rain this weekend into early next week.
"If they get it, it's probably price-negative. If they don't there's probably a little bit of a bounce," said Don Roose, president of U.S. Commodities in Des Moines.
Outside macro markets are a mixed influence Wednesday morning, analysts said.
Commodity traders will be keeping an eye on news out of a Federal Reserve Board meeting Wednesday afternoon, and are awaiting President Obama's State of the Union speech Wednesday night, for any rhetoric that is "commodity negative," Roose said. The President's recent proposal for bank reform has been seen as a negative for commodities.
The next downside price objective for the bears is pushing and closing prices below major psychological support at $9.00, a technical analyst said. The next upside technical objective for the bulls is pushing and closing March prices above solid technical resistance at last week's high of $9.84.
First resistance for March soybeans is seen at $9.50 and then at this week's high of $9.56. First support is seen at $9.40 and then at Tuesday's low of $9.32 1/2.
In other markets, soybean futures rose on the Dalian Commodity Exchange Wednesday, shaking off nervousness over credit tightening that rattled the commodities complex, as the market looked to supportive government agricultural policies and stronger global soy prices.
The benchmark September soybean contract settled CNY16 or 0.4% higher at CNY3,920 a metric ton.
Also, crude palm oil futures on Malaysia's derivatives exchange fell below MYR2,400 a metric ton due to selling pressure related to concerns over China's tightening monetary policy, but came off lows in a bout of short covering.
-By Ian Berry, Dow Jones Newswires; 312-341-5778; ian.berry@dowjones.com
(END) Dow Jones Newswires
01-27-10 0926ET
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