January 16, 2008

 

CBOT Soy Outlook on Wednesday: Lower; profit taking, outside market weakness

 

 

Chicago Board of Trade soybean futures are seen opening Wednesday's day session lower, pressured by profit taking in conjunction with broad based overnight weakness in commodity markets, analysts said.

 

CBOT soybean futures are called to start the session 14 to 16 cents lower.

 

In overnight e-CBOT trading, March soybeans were 16 cents lower at US$12.85 1/2, July soybeans were 16 1/2 cents lower at US$13.20 3/4, and November soybeans were 10 3/4 cents lower at US$12.74 1/4.

 

The weakness in outside markets sets the tone for early declines, with rain and cooler temperatures in parched areas of Argentina applying pressure, analysts added.

 

After setting new highs in recent sessions, a lack of fresh supportive news with the market seemingly adjusted to bullish crop data opens the door for traders to book some profits, a CBOT floor broker said.

 

However, bullish long-range fundamental outlooks, with tightening inventories and the need to push prices to levels that will ration demand and buy spring acres, should limit downside pressure, he added.

 

A technical analyst said the next downside price objective for March soybeans is pushing prices below solid technical support at US$12.70 1/2, which is the bottom of an upside price gap on the daily bar chart.

 

First resistance for March soybeans is seen at Tuesday's high of US$13.14 and then at US$13.25. First support is seen at Tuesday's low of US$12.86 1/2 and then at US$12.70 1/2.

 

The DTN Meteorlogix Weather Service said scattered rains during a 5-day period will help to improve growing conditions through the southern Brazil growing belt. In Argentina, major corn and soybean areas will see at least some thunderstorm activity and less hot weather during the next 7-10 days, especially during the short range period.

 

In other news, after a series of earlier measures over the last year failed to check rising prices of commodities such as food grains and edible oils, China Wednesday imposed price controls on essential commodities. The measures cover sectors including edible oils, grains and their products, liquefied petroleum gas, dairy products, meat and eggs, the National Development and Reform Commission said in statements published on its Web site.

 

Big commodity producers must now seek government approval before increasing prices while wholesalers and retailers must notify the government of price increases, according to various statements on the Web site.

 

Indonesia will boost its 2008 soybean output by almost 50% to reduce its dependence on imports amid soaring global prices of the commodity, a senior government official said Wednesday.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Wednesday on concern over more government price control measures. The benchmark September 2008 soybean contract settled RMB49 lower at RMB4,748 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange fell for the second straight day Wednesday, as traders took leads from lower crude oil and soyoil prices to liquidate positions and take profits. The benchmark April contract on Bursa Malaysia Derivatives ended MYR57 lower at MYR3,263 a metric tonne, close to an intraday low of MYR3,262/tonne.