September 6, 2007
CBOT Soy Outlook on Thursday: Down 7-9 cents on wheat retreat, crop estimates
Chicago Board of Trade soybean futures are expected to start day session trading 7 to 9 cents lower Thursday as lower wheat values in overnight trade and a bearish private crop production estimate are expected to weigh on values at the opening, analysts said
In overnight e-CBOT trading, Sept soybeans fell 8 cents to US$8.81 per bushel, and Nov also declined 8 cents to US$8.95. E-CBOT volume in November was 6,668 contracts.
Soybeans should start out on the defensive, a commission house analyst said. Wheat was sharply lower in the overnight session and soybeans have been supported by the explosive rally in wheat and could see some profit taking Thursday, the analyst said. In overnight E-CBOT trade, December wheat declined 15 1/4 cents to US$8.20 1/4.
A slightly bearish production estimate from FC Stone is also expected to supply light pressure to prices, a floor trader said. Wednesday after the close of day session trading, FC Stone estimated the 2007-08 U.S. soybean cop at 2.682 billion bushels with a yield of 42.4 bushels per acre. In August the U.S. Department of Agriculture estimated U.S. soybean production at 2.625 billion with a yield of 41.5 bushels per acre. The USDA is scheduled to release updated production estimates next Wednesday at 8:30 a.m. EDT.
Recent warm and dry weather continues to aid maturing corn in the northern and western sections of the U.S. Midwest, DTN Meteorlogix Weather said.
In the western U.S. Midwest, scattered showers are expected to end early Friday, with dry weather extending from Friday through Saturday, DTN Meteorlogix Weather said. There is a chance for light to moderate rain Sunday. Temperatures are expected to average below normal in this period.
In the eastern U.S. Midwest, light-to-moderate showers are expected to develop through eastern and southern areas on Friday and into Saturday, with rainfall potential 0.25-1.00 inches, Meteorlogix Weather said. Temperatures are expected to average above normal Friday and near-to-above normal west and above-normal east on Saturday.
In the 6- to 10-day forecast, temperatures are expected to average near to below normal and rainfall is forecast to average near to below normal, except in the extreme east and northwest where it may possibly be near to above normal.
On daily technical charts, November soybeans closed nearer the session low after hitting a fresh six-week high earlier in the session, a technical analyst said. Profit- taking from the recent strong gains was the feature Wednesday, the analyst said. The bulls still have upside technical momentum but any sharp weakness in wheat futures will spillover into soybeans, the analyst said.
The bulls' next upside price objective is closing prices above the November contract high of US$9.49 1/2, with the next downside price objective for market bears remains closing prices below solid support at US$8.88.
First resistance is seen at US$9.16 1/2, Wednesday's high and then at US$9.22 3/4, which is a gap area on the daily charts. First support is seen at US$9.00, and then at US$8.93 1/2.
Deliveries posted against the Chicago Board of Trade September soybean future were 1,551 contracts. Large issuers included the customer account of Man Professional Clearing which issued 833 contracts and the customer account of Kottke which issued 175 contracts. Large stoppers included the customer account of Man Professional Clearing, which stopped 834 contracts, and the customer account of the Combs division of Cunningham Commodities, which stopped 166 contracts. The last trade assigned was Sept. 5.
In overseas markets, crude palm oil futures were lower on the Bursa Malaysia Derivative Exchange with the benchmark November contract down MYR25 at MYR2,470/tonne
Soybean futures on China's Dalian Commodities Exchange settled modestly lower, as the market paused after recent strong growth, analysts said. The benchmark May 2008 contract settled down RMB6 at RMB3,873 per metric tonne.
