March 12, 2008

 

CBOT Soy Outlook on Wednesday: Down 8-10 cents; overnight theme, weak Asian markets

 

 

Chicago Board of Trade soybean futures are seen starting Wednesday's day session on the defensive, following the overnight theme, with weak Asian market influences and a lack of outside support weighing on prices.

 

CBOT soybean futures are called to start the session 8 to 10 cents lower.

 

In overnight electronic trading, May soybeans were 9 cents lower at US$13.98 3/4, July soybeans were 10 1/4 cents lower at US$14.13 1/4. May soyoil was 71 points lower at 62.48 cents per pound and May soymeal was US$1.70 higher at US$352.50 per short tonne.

 

The market is poised to follow the overnight theme, with declines in China and Malaysian soybean and vegoil markets setting the stage for a lower start, analysts said.

 

The absence of fresh fundamental news overnight following supportive ending stock data released Tuesday, managed to take some edge off futures. Traders are anticipating prices will settle into a range as the market looks ahead to end-of-month planting and stocks reports, analysts added.

 

The volatility in the market is creating increased trading and hedging risks, leaving traders taking a cautious approach to activity in the absence of fresh news, a CBOT floor broker said. Nevertheless, bullish long range outlooks, with tight projected old crop ending supplies and the uncertainties of new crop acreage and production are seen limiting losses, as the 2008 growing season has little room for error, he added.

 

A technical analyst said serious near-term chart damage has been inflicted after the big sell-off late last week. Technical odds have significantly increased that at least a near-term market top is in place. The next upside price objective for July soybeans is to push and close prices above solid technical resistance at US$14.69 1/2 a bushel, which would fill on the upside a big downside price gap on the daily bar chart. The next downside price objective is pushing and closing prices below solid support at this week's low of US$13.71.

 

First resistance for July soybeans is seen at Tuesday's high of US$14.51 and then at US$14.69 1/2. First support is seen at Tuesday's low of US$14.20 and then at US$14.00.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Wednesday, as market sentiment was nervous amid concerns over tightening measures by the government, including controls on prices. The benchmark January 2009 soybean contract settled RMB93 lower at RMB4,470 a metric tonne.

 

Soyoil hit limit-down during the session, as traders expect more soyoil to be released by the government from late next week. An official said earlier this week the government will release more edible oil into the market if prices keep rising.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Wednesday, tracking volatile trading in all major vegetable oil bourses amid speculation over China's price controls and domestic sales, said trade participants. The benchmark May contract on Bursa Malaysia Derivatives ended MYR73 lower at MYR3,765 a metric tonne.

 

In other news, Argentina announced a new sliding scale for export taxes on grains, which will see the export tax on soybeans rise 7-9 percentage points, based on current prices, Economy Minister Martin Lousteau announced Tuesday. The export tax on soyoil and meal, as well as sunflower oil, will rise by a similar amount, Lousteau said.

 

In deliveries, March soybean deliveries totaled 742 lots. Customer accounts at Man Professional Clearing issued and stopped 383 and 362 lots respectively. The last trade date assigned was March 11.

 

March soymeal deliveries totaled 442 lots. Customer accounts at Man Professional Clearing issued and stopped 274 and 299 lots respectively. The last trade date assigned was March 11.

 

March soyoil deliveries totaled 992 lots. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was March 11.