September 3, 2008
CBOT Soy Outlook on Wednesday: Down 18-20 cents on rain, outside market factors
Soybean futures on the Chicago Board of Trade were expected to start Wednesday's day session on the defensive, following through on Tuesday's declines.
CBOT soybean futures are called 18 to 20 cents lower.
In overnight electronic trading, September soybeans were 9 cents lower at US$12.92 1/2 and November soybeans were 23 1/2 cents lower at US$12.75. December soyoil was 73 points lower at 52.10 cents per pound and December soymeal was US$7.90 lower at US$347.50 per short tonne.
Fundamentally, the market is feeling pressure from beneficial rains moving into the U.S. Midwest from tropical depression Gustav, analysts said. The soy market remains sensitive to weather, as rains will provide good finishing moisture for soybean crops, a CBOT floor analyst said.
A firmer U.S. dollar in conjunction with weakness in crude oil as well as declines in gold and silver futures are expected to attract speculative sales, he added.
Meanwhile, lingering uncertainty surrounding the 2008 U.S. soy crop and tight supply outlooks remain, underpinning influences to limit downside pressure, traders said.
A technical analyst said the next upside price objective for November soybeans is to push and close prices above solid technical resistance at US$13.16 3/4 a bushel, which is the top of Tuesday's downside price gap. The next downside price objective is pushing and closing prices below solid technical support at Tuesday's low of US$12.55.
First resistance for November soybeans is seen at Tuesday's high of US$13.05 and then at US$13.16 3/4. First support is seen at US$12.75 and then at US$12.55.
The DTN Meteorlogix weather forecast said heavy to torrential rains associated with tropical depression Gustav are expected to move through the central Midwest region during the next 48 hours. Filling soybean crops may still benefit from rain but this upside is less as time goes by, Meteorlogix reports. Cooler weather will slow the maturation process in western areas during the next few days or more.
The US Department of Agriculture rated 57% of the soybean crop as good to excellent, down from 61% last week. Traders had expected the score to drop between 1 to 3 percentage points.
Indiana's crop saw a significant drop to 49% good to excellent from 59% last week. Areas of the eastern corn belt have been particularly dry. In Iowa, 62% of the crop was seen as good to excellent, down from 63% last week. The Illinois crop was rated 62% good to excellent, down from 68% last week.
The USDA said 94% of the crop was setting pods, down from 98% last year and the average of 97%. Ninety-five percent of Iowa's crop was setting pods, below 100% in 2007 and the average of 99%.
Commodity risk-management firm FC Stone on Tuesday estimated the 2008-09 U.S. soybean crop at 3.003 billion bushels, with a yield of 41.0 bushels per acre. The firm's soybean production estimate represents an increase from its estimate last month, although it lowered its yield forecast.
FC Stone in August pegged the soybean crop at 2.993 billion bushels, with a yield of 41.5 bushels per acre. The U.S. Department of Agriculture in August estimated 2008 U.S. soybean production at 2.973 billion bushels, with a yield of 40.5 bushels.
In deliveries, September soybean deliveries totaled 3 lots. The last trade date assigned was July 30.
In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled slightly higher Wednesday on deterioration in conditions for the U.S. soybean crop, but a collapse in crude-oil prices limited the rise. The benchmark January 2009 soybean contract settled RMB21 (US$3.08) higher at RMB4,237 per tonne, or up 0.50%.
Crude palm oil futures on Malaysia's derivatives exchange ended 1.3% lower Wednesday, failing to hold on to early gains as investors liquidated positions and resorted to profit-taking. The benchmark November contract on Bursa Malaysia Derivatives ended MYR33 (US$6.14) lower at MYR2,451 a metric tonne, off an intraday high of MYR2,550.
