September 23, 2009

 

CBOT Soy Outlook on Wednesday: Down 8-12 cents; less threatening weather outlook

 

 

Chicago Board of Trade soybean futures are poised to backpedal at the start of Wednesday's day session, under pressure from less threatening weather for Midwest crops.

 

CBOT soybean futures are seen starting 8 cents to 12 cents lower.

 

The market is set to ease, taking some risk premium out of the market, as morning forecasts are slightly warmer for the Midwest next week, said Don Roose, president of U.S. Commodities.

 

Futures rallied Tuesday on midday forecasts pointing to a potential freeze threat for the Midwest next week.

 

A lack of fresh supportive news is seen aiding the defensive tone, with commodity-negative outside market influences providing little incentive for buyers to hang there hats on, Roose said.

 

Seasonal pressure is a bearish influence on the market, with harvest activity picking up. Nevertheless, weather remains the dominant issue in the market, and each week that passes by without a freeze threat the less impact a frost or freeze will have on crop size, said Victor Lespinasse, analyst with grainanalyst.com.

 

"Last week, a frost threat produced dramatic rallies in corn and soybeans, but Tuesday's cold forecast produced only a mild bounce, reflective of frost impacts moving forward," Lespinasse said.

 

A technical analyst said market bears still have the near-term technical advantage, with prices in a six-week-old downtrend on the daily bar chart.

 

First resistance for November soybeans is seen at Tuesday's high of US$9.27 1/4 and then at US$9.40. First support is seen at US$9.09 1/4 and then at Tuesday's low of US$9.03 1/4.

 

The DTN Meteorlogix weather forecast said crops in the Midwest region will continue to benefit from near- to above-normal temperatures for at least the next five days. Cooler weather early next week bears watching but the early indications suggest this will not be cold enough to cause problems for crops.

 

In the U.S. Delta, showers will be in the area for a few more days. Drier weather is seen developing during the weekend and early next week. Conditions may slowly improve at that time.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Wednesday due to broad weakness in commodities, and analysts expect ample supply and pre-holiday liquidation to lead to further losses in coming days. The benchmark May 2010 soybean contract settled RMB10 lower at RMB3,701 a metric tonne.

 

Meanwhile, China sold 14,800 metric tonnes of soybeans, or 2.9% of the volume offered from its state reserves, in a weekly auction Wednesday.

 

Crude palm oil futures on Malaysia's derivatives exchange fell Wednesday as weak commodity markets placed pressure on prices, trade participants said. The new benchmark December CPO contract on the Bursa Malaysia Derivatives ended MYR44 lower at MYR2,146 a metric tonne.