October 21, 2009

 

CBOT Soy Outlook on Wednesday: Seen lower on outside market pressure

 

 

Soybean futures on the Chicago Board of Trade are seen lower at the start of Wednesday's day session, under pressure from outside markets.

 

CBOT soybean futures are seen starting 2 to 4 cents lower. In overnight trade, Nov soybeans were 4 3/4 cents higher at US$9.77 3/4.

 

The outside markets, with crude oil, metals and equities lower in early action, are poised to weigh on futures to start the day session, said Don Roose, president U.S. Commodities.

 

Favorable yield reports from early harvesting are providing indications that current U.S. government crop estimates are understated and that should add to the defensive tone, Roose said.

 

However, downside risks remain limited amid harvest slowing wet, cool weather moving through the Midwest.

 

Nevertheless, the trade is taking a stance that the record crop will ultimately be harvested and that is enough to overshadow near term harvest delays, Roose added.

 

Meanwhile, the market has seemingly settled into a consolidation phase with big crop forecasts providing overhead resistance while weather serves as an underpinning factor.

 

A technical analyst said first resistance for November soybeans is seen at US$10.00 and then at Tuesday's high of US$10.04 3/4. First support is seen at Tuesday's low of US$9.79 3/4 and then at US$9.71.

 

The DTN Meteorlogix weather forecast said rain will return from western to eastern areas of the Midwest Wednesday-Thursday, possibly heavy in some sections. The outlook for next week includes some risk for more heavy rains and more very cool conditions, especially later in the week.

 

In the Delta, drier weather will continue Wednesday before rain or thunderstorms arrive Thursday. Temperatures should be warmer into Thursday, Meteorlogix forecasts.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Wednesday, due to a lack of support from CBOT. The benchmark May 2010 soybean contract settled RMB7 a metric tonne lower at RMB3,735/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower in range bound trade Wednesday on spillover pressure from a slump in crude oil futures and further unwinding of positions to take profits, trade participants said. The benchmark January contract on the Bursa Malaysia Derivatives ended MYR12 lower at MYR2,168 a metric tonne.