September 16, 2009

 

CBOT Soy Outlook on Wednesday: Down 10-12 cents; correction, weather update

 

 

Chicago Board of Trade soybeans are expected to open lower Wednesday as the market pulls back from Tuesday's strong rally, traders said.

 

Soybeans are called 10 to 12 cents lower. November soybeans were down 12 1/2 cents to US$9.47 1/2 per bushel in overnight trade, and January soybeans were down 12 3/4 cents to US$9.51 1/4.

 

October soymeal was down US$4.80 to US$296.30 per short tonne and October soyoil was down 14 points to 34.29 cents per pound.

 

Weather forecasts showing a frost threat in the Midwest for next week sent the market soaring Tuesday. While the frost remains an issue, weather models are slightly less threatening Wednesday morning than they were Tuesday, analysts said.

 

WSI AgTrader said in a morning report that one weather model "backed off on the freeze idea in the areas we yesterday pegged for frost late next week." The report said a freeze would now likely be confined to dry areas of Minnesota and Wisconsin, although other areas, such as Iowa and northwest Illinois, would still see frost.

 

Soybeans are seen as less vulnerable than corn, but the crop is still behind schedule and could lose yield in an early frost.

 

Some analysts said the market was following corn's lead Tuesday, as volume was "relatively modest" in soybeans compared to corn, said Farm Futures senior editor Bryce Knorr.

 

Whether the market can show "important follow-through upside strength this week" is key, a technical analyst said.

 

The next upside price objective for the bean bulls is to push and close November prices above major psychological resistance at US$10.00 a bushel, the technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid technical support at US$9.00 a bushel.

 

First resistance for November soybeans is seen at Tuesday's high of US$9.77 3/4 and then at US$9.90. First support is seen at US$9.50 and then at US$9.40.

 

In other markets, soybean futures rose on the Dalian Commodity Exchange Wednesday, fueled by a rally on the Chicago Board of Trade and concerns about supply.

 

The benchmark May 2010 soybean contract settled 1.9% higher at RMB3,650 a metric tonne.

 

Also, crude palm oil futures on Malaysia's derivatives exchange rose 4.4% Wednesday as investors covered shorts due to a rise in demand in the cash market and spillover support from the overnight rise in crude oil and soyoil.

 

China's grain authorities sold 15,500 metric tonnes of soybeans in their weekly auction of state reserves of the commodity, or 3.1% of the stock on offer, the National Grain and Oil Information Center said in a statement on its Web site Wednesday.

 

The average price fetched was RMB3,753/tonne, the statement said.