August 26, 2008

 

CBOT Soy Outlook on Tuesday: Lower; profit taking on recent gains

 

 

Chicago Board of Trade soybean futures are expected to start Tuesday's day session on the defensive, pulling back from Monday's advances on general commodity selling amid the absence of fresh supportive news.

 

CBOT soybean futures are called 30 to 35 cents lower.

 

In overnight electronic trading, September soybeans were 36 1/4 cents lower at US$13.03 and November soybeans were 36 3/4 cents lower at US$13.10 1/4. December soyoil was 185 points lower at 53.40 cents per pound and December soymeal was US$8.80 lower at US$357.00 per short tonne.

 

Strength in the U.S. dollar is providing resistance for prices, with overnight weakness in outside markets seen producing some general commodity wide profit taking, said Jason Roose, analyst with U.S. Commodities in West Des Moines, Iowa.

 

The firmer dollar is generating fears of lost exports, and after recent rallies, traders are concerned that there is a need to keep U.S. prices competitive in world markets, Roose added.

 

The market has built some premium back in the market, and without fresh supportive news to inspire buyers, profit taking emerges, traders said.

 

Asian soy and vegoil markets trended lower overnight, breaking away from Monday's upward movement in U.S. futures and that is seen aiding the lower theme.

 

However, weather remains the driver of the market, with dry Midwest conditions expected to limit losses and keep prices well supported into the fall, Roose said.

 

A market technician said the next upside price objective for November soybeans is to push and close prices above psychological resistance at US$14.00 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$13.00.

 

First resistance for November soybeans is seen at Monday's high of US$13.74 1/2 and then at US$14.00. First support is seen at Monday's low of US$13.38 1/2 and then at US$13.25.

 

U.S. Department of Agriculture rated 61% of the soybean crop as good to excellent, down from 62% last week. Traders had expected conditions to stay steady or drop as much as three percentage points.

 

In Iowa, 63% of the crop was seen as good to excellent, down from 65% last week. Indiana's crop was 59% good to excellent, down from 63% last week. Illinois' soybean crop improved along with its corn. The crop was rated 68% good to excellent, up from 66% last week. The USDA said 97% of the crop was blooming, down slightly from 99% last year and the average of 99%. The USDA said 88% of the crop was setting pods, down from 95% last year and the average of 94%.

 

The DTN Meteorlogix weather forecast said filling soybeans will continue under some stress due to late season dryness during the 10-day period. The possible exception to this is in local areas that picked up some moisture during the past few days and possibly in Ohio where moisture from Fay could cause showers during the next day or two. There is no significant cold expected for at least the next 10 days.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Tuesday as a fresh selloff following recent gains was triggered by weak sentiment toward commodities, said analysts. The benchmark January 2009 soybean contract settled RMB85 lower at RMB4,242 a metric tonne, after trading between RMB4,166 and RMB4,318/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower on sharp losses in vegetable oil prices and weak local fundamentals, trade participants said. The benchmark November contract on the Bursa Malaysia Derivatives ended MYR191 lower at MYR2,409 a metric tonne.