CBOT SOY OUTLOOK: Lower On Demand, Fears About N. Africa Unrest

CHICAGO (Dow Jones)--U.S. soybean futures are expected to open lower Tuesday on jitters about political instability in the Middle East and North Africa and worries about export demand.

Traders expect Chicago Board of Trade soybeans to open 12 to 15 cents lower. In overnight trade, soybeans for March delivery were down 15 cents, or 1.1%, to $13.53 per bushel.

Soymeal for March delivery was down $1.90, or 0.5%, to $360.10 per short ton. Soyoil futures had support from crude oil and were flat at 56.49 cents per pound.

The losses were prompted by unrest in North Africa, which is making investors increasingly nervous about the global economy, analysts said. The unrest, including increased violence in Libya, a key oil-producer, has sent crude-oil prices skyrocketing.

Higher energy costs could derail the recovery of the global economy, which would hurt commodity demand, analysts said.

The soybean market has its own negative fundamental pressure, analysts said. While supplies remain very tight, in the past several days China, a key buyer, has canceled some U.S. sales. That demonstrates a shift in business from the U.S. to Brazil, which is expected to have a large harvest this spring.

"There's more beans in the world market now than there was 30 days ago," said Don Roose, president of U.S. Commodities in Des Moines, Iowa. "That's the bottom line."

A further slip in prices could prompt some technical selling, analysts said. The market closed lower on Friday and lost 3.4% last week.

But technical analyst Jim Wyckoff said that soybean bulls "still have the overall near-term technical advantage at present."

Worries about tight global supplies, and whether U.S. farmers will plant enough acres in 2011, should continue to underpin the market, according to analysts.

"Extreme volatility is likely to continue as traders are faced with trend changes and unusual outside market stimulus," Roach Ag Marketing said in a commentary.

(Source: http://online.wsj.com/article/BT-CO-20110222-710483.html)