February 26, 2008

 

CBOT Soy Outlook on Tuesday: Down 15-20 cents; overbought market conditions

 

 

Soybean futures on the Chicago Board of Trade are expected to start Tuesday's day session on the defensive, drifting lower on selling associated with overbought market conditions.

 

CBOT soybean futures are called to start the session 15 to 20 cents lower.

 

In overnight electronic trading, March soybeans were 19 1/2 cents lower at US$14.32 1/2, May soybeans were 19 1/4 cents lower at US$14.50, July soybeans were 21 1/2 cents lower at US$14.64, and November soybeans were 19 cents lower at US$13.98.

 

"The market is a little overdone after an historic run to new all-time highs," a CBOT floor analyst said.

 

The absence of support from outside markets and ideas the market's current price levels adequately reflect current fundamentals opens the door for light profit taking to emerge, analysts added.

 

Nevertheless, futures remain in a bullish uptrend, with strong demand, tightening stocks and acreage uncertainties expected to attract buyers on breaks, analysts added.

 

A technical analyst said the next upside price objective for July soybeans is to push and close prices above major psychological resistance at US$15.00 a bushel. The next downside price objective is pushing and closing prices below support at US$14.54, which would fill on the downside Monday's big upside price gap on the daily bar chart.

 

First resistance for July soybeans is seen at Monday's contract high of US$14.98 1/2 and then at US$15.00. First support is seen at Monday's low of US$14.71 and then at US$14.54.

 

The DTN Meteorlogix weather forecast said wet conditions in Brazil from Parana northward will likely cause delays to the soybean harvests this week. A significant amount of rain has been added to the Rio Grande do Sul forecast from Monday. Should this forecast be verified, it would most likely be highly beneficial to filling soybeans in the area, Meteorlogix said.

 

In Argentina, periodic thundershower activity and only brief hot spells likely means mostly favorable conditions for filling crops.

 

In other news, global soybean output is expected to fall short of demand by around 20 million metric tonnes in 2007-08, Thomas Mielke, executive director, ISTA Mielke GmbH, publisher of Oil World, said Tuesday.

 

"Global vegetable oil prices are currently high because of the deficit in soybean and soyoil production," Mielke told Dow Jones Newswires. He forecast soyoil stocks to end the crop year to September 2008 at around 3.82 million tonnes, down from 4.04 million tonnes a year earlier.

 

The share of soyoil-based biodiesel in total U.S. biodiesel output is falling due to the record high prices of the soy complex, Alan Weber, adviser to the country's National Biodiesel Board, said Tuesday.

 

"The share of soyoil-based biodiesel in total biodiesel production was 90% in 2006, it averaged 80% in 2007 and was around 64.5% in December 2007," Weber said at an industry conference.

 

In overseas markets, soybean futures on the Dalian Commodity Exchange settled lower Tuesday, tracking losses in Chicago Board of Trade's electronic trading during Asian hours. The benchmark September 2008 soybean contract settled RMB52 lower at RMB5,147 a metric tonne.

 

Crude palm oil futures on Bursa Malaysia Derivatives fell sharply, tracking huge soyoil losses in overnight trading, trade participants said. The benchmark May contract ended down MYR74 at MYR3,792 a metric tonne, well off the intraday high of MYR3,903/tonne.