March 4, 2008

 

CBOT Soy Outlook on Tuesday: Down 10-12 cents; overnight trade, profit taking

 

 

Chicago Board of Trade soybean futures are seen opening Tuesday's day session lower, following through on overnight losses, as profit taking sets in following record highs in U.S. and world soybean and soyoil markets.

 

CBOT soybean futures are called to start the session 10 to 12 cents lower.

 

In overnight electronic trading, March soybeans were 15 1/4 cents lower at US$15.29 1/2, May soybeans were 11 cents lower at US$15.48 1/2, July soybeans were 10 cents lower at US$15.60, and November soybeans were 1 3/4 cents lower at US$14.45 3/4.

 

A little profit-taking pressure is expected after prices turned around in overnight trade, as overbought market conditions following a rise to record highs and spillover weakness from a down turn in Asian soybean and vegoils apply pressure, said Jason Roose, analyst with U.S. Commodities in West Des Moines, Iowa.

 

Rumors that China's government may sell vegetable oil from state reserves, and cut vegetable oil import tariffs to curb surging prices, helped reverse Asian prices overnight, analysts said.

 

"It's possible the Chinese government wants to regulate domestic prices, following the stockpiling of soyoil imports," Shi Yan, an analyst at China International Futures told Dow Jones Newswires.

 

Worries over slowing demand at record high prices for soybeans coupled with ideas at some point weakness from the South American harvest will set in, have traders poised to take a few profits, Roose added.

 

However, bullish technical strength, inflationary based buying amid firm outside metal and crude oil futures should provide underlying support to limit losses, analysts added.

 

A technical analyst said there are still no strong early technical warning signals that a market top is close at hand in soybeans. However, a decent corrective pullback is overdue. The next upside price objective for July soybeans is to push and close prices above major psychological resistance at US$16.00 a bushel. The next downside price objective is pushing and closing prices below support at US$15.48, which would fill on the downside Monday's upside price gap on the daily bar chart.

 

First resistance for July soybeans is seen at Monday's contract high of US$15.96 and then at US$16.00. First support is seen at Monday's low of US$15.67 and then at US$15.48.

 

In deliveries, March soybean deliveries totaled 402 lots. A customer account at Man Professional Clearing was the primary issuer of 399 lots, with stoppers scattered among various commission houses. The last trade date assigned was March 3.

 

March soymeal deliveries totaled 922 lots. Customer accounts at Man Professional Clearing issued and stopped 746 and 718 lots respectively. The last trade date assigned was March 3.

 

March soyoil deliveries totaled 1,262 lots. The house account at ADM Investor Services issued 769 lots. Stoppers were scattered among various commission houses. The last trade date assigned was March 3.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly lower Tuesday on profit-taking, prompted by market talk about possible government measures to curb prices. The benchmark January 2009 soybean contract fell RMB49 to settle at RMB4,875 a metric tonne, after trading between RMB4,728/tonne and RMB4,980/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange fluctuated widely Tuesday, rising to a record high before wiping off a large part of recent gains as profit-taking set in, trade participants said. The benchmark May contract on the Bursa Malaysia Derivatives ended MYR231 lower at MYR4,099 a metric tonne after reaching a record intraday high of MYR4,486/tonne.