October 3, 2007

 

CBOT Soy Outlook on Wednesday: Down 9-11 cents; follow-through spec sales

 

 

Chicago Board of Trade soybean futures are seen starting Wednesday's day session on the defensive, pressured by follow through selling from Tuesday's sharp declines.

 

CBOT soybean futures are called to start the session 9 to 11 cents lower.

 

In overnight e-CBOT trading, November soybeans were 10 1/4 cents lower at US$9.33 1/2, and January soybeans were 10 1/2 cents lower at US$9.51 1/2.

 

Carryover selling is anticipated to start the session as overbought conditions and harvest related weakness are expected to attract continued speculative long liquidation, analysts said.

 

Seasonal pressure and spillover from sharply lower opening calls for wheat futures are seen aiding the lower tone, with end users and producer selling adding to the losses, as they look to pass additional risk to speculative traders, analysts added.

 

However, stability in outside inflationary markets with metals and energy markets higher and the U.S. dollar lower should provide some underlying support to attract some buying on any sign of downside exhaustion, a CBOT floor analyst said.

 

A market technician said some chart damage occurred on Tuesday's sharp price break, but it was not serious damage. However, strong follow-through selling pressure on Wednesday or on Thursday would likely produce serious near-term chart damage to suggest that a market top is in place. The next upside price objective for November soybeans is to push prices above solid resistance at US$9.90 1/2, which is the top of Tuesday's big downside price gap on the daily bar chart. The next downside price objective is closing prices below solid support at US$9.20.

 

First resistance for November soybeans is seen at US$9.50 and then at US$9.60. First support is seen at Tuesday's low of US$9.42 and then at US$9.32.

 

The DTN Meteorlogix Weather Service forecast said hot and mostly dry weather continues over Brazil's Mato Grosso do Sul, Mato Grosso and southwest Goias for at least another 7 days. High temperatures from the upper 90s to the low 100s Fahrenheit continue. Any significant soybean planting cannot take place until the rains arrive, Meteorlogix said.

 

October soyoil deliveries totaled 3,742 lots. Issuers and stoppers were scattered among various commission houses, with customer accounts at Man Professional Clearing the primary issuer and stopper of 999 and 1,276 lots respectively. The last trade date assigned was October 2.

 

October soymeal deliveries totaled 383 lots. A customer account at Kottke was the primary issuer of 301 lots, with stoppers scattered among various commission houses. The last trade date assigned was October 2.

 

In overseas markets, crude palm oil futures on Malaysia's derivatives exchange continued their downtrend for the third straight day Wednesday amid steady liquidation by funds, weak Chinese demand and the spillover impact from weak soyoil prices on CBOT, market participants said.

 

The benchmark December contract on the Bursa Malaysia Derivatives has cumulatively lost 99 points since Friday's close. The contract ended down MYR24 at MYR2,545 metric tonne.