July 2, 2008

 

CBOT Soy Outlook on Wednesday: Down 3-5 cents; consolidating ahead of holiday

 

 

Soybean futures at the Chicago Board of Trade are expected to start Wednesday's day session lower, following the overnight theme, as the market consolidates heading toward an extended holiday weekend.

 

CBOT soybean futures are called 3 to 5 cents lower.

 

In overnight electronic trading, July soybeans were 5 cents lower at US$16.23 and November soybeans were 4 1/2 cents lower at US$16.05 1/2. December soyoil was 28 points lower at 68.10 cents per pound and December soymeal was US$0.90 higher at US$420.10 per short tonne.

 

Futures set new record highs overnight, before selling interest emerged to weigh on prices, traders said.

 

The market is showing some more interest in liquidation , with traders looking to trim length in the market, as they look to see what weather conditions look like after the extended Independence Day holiday weekend, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The Midwest weather forecast looks favorable and traders are poised to take some premium out of prices, he added.

 

Mixed signals from outside inflationary markets are failing to influence price direction.

 

Traders anticipate two-sided action to emerge during the session, as the situation of tight supplies remains an underpinning feature to limit losses, analysts said. Nevertheless, without any fresh bullish news to inspire buying at record highs, the market is poised for a light profit taking setback to emerge, analysts added.

 

A technical analyst said market bulls have a full head of steam heading into the week right after the Fourth of July holiday, which is historically a critical and extra volatile week in the grain futures markets. The next upside price objective for November soybeans is to push and close prices above solid technical resistance at US$16.50 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$15.00.

 

First resistance for November soybeans is seen at Tuesday's contract high of US$16.10 and then at US$16.25. First support is seen at US$16.00 and then at US$15.79.

 

The DTN Meteorlogix weather forecast said episodes of scattered to widely scattered showers and thunderstorms are seen for the western Midwest in the next 48 hours. Rainfall totals of 0.30-1.50 inches with locally heavier amounts are expected. The heaviest activity will favor southern areas, with dry conditions seen for Friday-Saturday.

 

In the eastern Midwest, dry conditions or just a few light showers are on tap for Wednesday, Meteorlogix said. Scattered showers and thunderstorms are forecast for Thursday and Friday, with rainfall totals of .50-2.00 inches.

 

In deliveries, July soybean deliveries totaled 375 lots. The house account at Term Commodities issued all 375 lots, with stoppers scattered among various commission houses. The last trade date assigned was June 11.

 

Egypt's state-owned Food Industries Holding Company, or FIHC, is tendering to buy 20,000-25,000 metric tonnes of soybean oil, Cairo-based traders said Wednesday. FIHC is looking to buy the oil for August shipment, a trader told Dow Jones Newswires.

 

India state-run PEC Ltd. has floated a tender to import 24,000 metric tonnes of crude degummed soyoil for delivery in July and August, the company said late Tuesday. The import is part of the federal government's plan to purchase 1 million tonnes of edible oils to sell at subsidize rates to lower income households.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Wednesday, following strong CBOT gains Tuesday. The benchmark January 2009 soybean contracts settled up RMB61, or 1.2%, at a record high of RMB5,205 a metric tonne, after trading between RMB5,181 and RMB5,225/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher Wednesday as the large price lag between palm oil and its substitute soyoil meant palm oil prices still had room to climb, said trade participants. The benchmark September contract on the Bursa Malaysia Derivatives ended up MYR41 at MYR3,616 a metric tonne.