March 19, 2008

 

CBOT Soy Outlook on Wednesday: Down on overdone ideas, outside market influences

 

 

Soybean futures on the Chicago Board of Trade are expected to open Wednesday's day session lower, backpedaling on speculative selling amid overdone ideas and bearish outside influences, analysts said.

 

CBOT soybean futures are called to start the session 15 to 17 cents lower.

 

In overnight electronic trading, May soybeans were 17 cents lower at US$12.90, July soybeans were 15 1/4 cents lower at US$13.06 3/4. May soyoil was 100 points lower at 57.40 cents per pound and May soymeal was US$1.00 higher at US$331.50 per short tonne.

 

The absence of fresh supportive news coupled with lingering economic jitters, and lower crude oil and palm oil futures overnight have traders looking to reduce their risk exposure heading toward the extended Easter holiday weekend, analysts added.

 

Meanwhile, soybean prices are likely to keep falling during the remainder of this week on the choppy global economic scenario, Chris de Lavigne, analyst with Singapore-based consultancy firm Frost & Sullivan told Dow Jones Newswires.

 

"I think two factors have played a role in the fall in the edible oils complex. One, the run-up in prices over the past several weeks in soybeans, soyoil and palm oil was overdone, so there's a correction now," he said. "Two, the jittery U.S. economic scenario is making some investors opt for liquidation even in commodities," he added.

 

Favorable harvest reports from South America are seen aiding the lower tone, but with the uncertainty of 2008 U.S. soy acreage and supportive longer range fundamentals, downside moves are seen limited, a CBOT floor analyst adds.

 

A market technician said serious near-term chart damage has been inflicted recently to suggest a near-term market top is in place. A V-Top reversal pattern has formed on the daily bar chart, he added.

 

The next upside price objective for July soybeans is to push and close prices above solid technical resistance at US$13.75 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$13.00. First resistance for July soybeans is seen at Tuesday's high of US$13.33 1/2 and then at US$13.50. First support is seen at US$13.00 and then at Tuesday's low of US$12.80.

 

In overseas markets, crude palm oil futures on Malaysia's derivatives exchange fell sharply Wednesday amid volatile speculative trading and the possibility of ample soybean production in South America easing demand for palm oil over the next three months, trade participants said. The benchmark June contract on Bursa Malaysia Derivatives ended MYR120, or 3.5% lower, at MYR3,330 a metric tonne.

 

Soybean futures traded on the Dalian Commodity Exchange settled mostly up Wednesday, boosted by gains in soybean futures at the CBOT Tuesday. The benchmark January 2009 soybean contract rose RMB11 to settle at RMB4,235 a metric tonne, after trading between RMB4,186/tonne and RMB4,310/tonne.