August 19, 2009

 

CBOT Soy Outlook on Wednesday: Down 10-15 cents on weather, china market slide

 

 

Soybean futures on the Chicago Board of Trade are expected to open 10 cents to 15 cents lower Wednesday on crop-friendly weather in the U.S. Midwest and a slump in China's markets overnight.

 

In electronic trading, September soybean futures were down 14 cents to US$9.81 1/2 a bushel, and November futures were down 14 1/4 cents to US$9.44 3/4, after falling to US$9.40 1/2, the lowest since US$9.13 3/4 on July 30.

 

A tumble in China's stock market spilled into commodities, sending soybean futures on the Dalian Commodity Exchange lower. The weakness stirred concern over economic strength in China, a major customer for U.S. soybeans, analysts said.

 

"The theory with is if they slow down (economically), that means they slow down their commodity purchases," said Don Roose, president of U.S. Commodities, a West Des Moines, Ia., broker.

 

Also deemed bearish for the soy complex was a report that China's government will work out methods to increase sales of soybeans from its reserves, possibly including a subsidy.

 

China's State Council is considering a plan to subsidize soybean crushers in major producing regions in the northeast, the Sina.com information portal reported Wednesday.

 

Still, pressure on soybean futures is "primarily coming from non-threatening weather" in the Midwest, Roose said. "We're getting some timely rains that are helping the soybeans."

 

Favorable weather increases the chances that the government will revise higher its estimate for the U.S. soybean harvest, Roose said.

 

Scattered showers are forecast for parts of the Midwest Wednesday and Thursday, according to Meteorlogix.

 

"Warm temperatures and adequate soil moisture will favor the pod-setting and -filling crop," Meteorlogix said. "Crop development remains behind normal in most areas although the warmer temperatures will increase crop development."