September 2, 2009

 

CBOT Soy Outlook on Wednesday: Seen lower; crop potential, technical weakness

 

 

Benign weather forecasts, technical pressure and the potential for bumper crops is seen weighing on Chicago Board of Trade soybean futures to start Wednesday's day session.

 

CBOT soybean futures are seen opening 4 cents to 6 cents lower.

 

The absence of a weather threat for Midwest soybean crops are promoting thoughts of record 2009 production and without any fresh export demand or supportive outside market influences, prices remain on the defensive, said Victor Lespinasse, analyst with Grainanalyst.com.

 

Traders are continuing to extract weather risk premium from the market each day there is no threat of a frost or freeze scare, and with analysts touting the potential for bumper crops, buyers are taking a cautious approach.

 

Meanwhile technical pressure is adding to the weak tone, with pre-placed sell orders triggered as prices fall below chart support. The ability of the November contract to settle below their long term uptrend line Tuesday was a bearish signal to the market, according to a market note from Midwest Market Solutions.

 

A technical analyst said first resistance for November soybeans is seen at US$9.67 1/4 and then US$9.80. First support is seen at Tuesday's low of US$9.50 3/4 and then at US$9.40.

 

The T-storm Weather forecast said cool conditions will prevail in the U.S. Midwest through Thursday, with continued locally heavy rainfall in the far western Midwest. Scattered showers and thunderstorms will move in the Delta and Midwest during the weekend and early next week. But until this storm system arrives, a majority of the Midwest will stay sunny and dry, with temperatures much warmer this weekend and next week, T-storm Weather said.

 

Commodity brokerage firm FCStone released its Sept. 1 U.S. production estimates late Tuesday. FCStone forecast the 2009-10 soybean crop at 3.266 billion bushels, with an average yield of 42.6 bushels an acre.

 

In August, the U.S. Department of Agriculture put the U.S. soybean crop at 3.199 billion. The USDA is scheduled to release updated figures Sept. 11 at 8:30 a.m. EDT (1230 GMT).

 

CBOT September soyoil deliveries totaled 2,925 lots. Customer accounts at Man Professional Clearing issued 1,094 lots. The house account at ADM Investor Services stopped 14 lots, while customer accounts at Man Professional Clearing stopped 814 lots. The last trade date assigned was September 1.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Wednesday, tracking an overall fall in commodities and overnight fall in crude oil. The benchmark May 2010 soybean contract settled RMB73 lower at RMB3,598 a metric tonne.

 

Chinese government sold 10,006 metric tonnes of soybeans from its reserves Wednesday, or 2.1% of the volume offered. Traders stayed on the sidelines amid high auction prices, while waiting for expected government subsidies, said Gao Yunyue, an analyst with Zhejiang Dadi Futures Brokerage Co.

 

Crude palm oil futures on Malaysia's derivatives exchange fell 3.1% on long liquidation Wednesday, as spillover weakness from Dalian Commodity Exchange damped sentiment, trade participants said. The benchmark November CPO contract on the Bursa Malaysia Derivatives traded MYR67 lower at MYR2,236/tonne.