October 29, 2008
CBOT Soy Outlook on Wednesday: Boosted on equities, crude oil rally
Soybean futures on the Chicago Board of Trade are expected to rally Wednesday, following surging equities and crude oil atop a weakening U.S. dollar.
CBOT soybean futures are called 25-30 cents higher.
In overnight electronic trading, November soybeans jumped 28 3/4 cents to US$9.07 1/2 cents per bushel. January soybeans added 29 1/2 cents to US$9.17 1/2. December soymeal increased US$7.40 to US$274.20 per short tonne, while December soyoil was 112 points higher at 33 cents per pound.
The influence of outside markets remains so strong "it's almost a layup" to call a bounce in the soy and grain pits, a CBOT floor trader said.
The market's next major fundamental focus should rest on harvest yields reflected in the Nov. 10 crop production report from the U.S. Department of Agriculture, he added.
"With beans yields disappointing as harvest has progressed, U.S. balance sheets leave little room for a cushion if South American production fails to meet USDA projections," noted Benson Quinn analyst Kim Rugel in her daily soybean review.
Soybean bears continue to focus on closing January soybeans below "solid technical support at the October low of US$8.38 1/2," a market technician said, pegging first support at Tuesday's low of US$8.71 and then the week's low of US$8.54.
The bears still maintain technical control, he added.
The bulls must close above solid technical resistance at Tuesday's high of US$9.59 a bushel, he said, marking first resistance at US$9 and then US$9.25.
Harvest weather should improve across the U.S. Midwest for the next week with temperatures ranging from 26-72 degrees Fahrenheit, according to DTN Meteorlogix.
The Midwest can expect mostly dry weather with a few light showers developing to the east on Sunday, the private forecasting firm said.
In Brazil, warm to hot, dry weather depletes soil moisture for planting and developing soybeans through northern Mato Grosso, while weather is "generally favorable" through Parana and "drier weather would benefit through Rio Grande do Sul," DTN said.
Meanwhile, in Argentina, "beneficial rains" should improve soil moisture conditions for crop planting, the forecasters add.
In global trading news, China's soybean futures traded mostly higher on the Dalian Commodity Exchange Wednesday, thanks to gains made during electronic trading at the Chicago Board of Trade in Asian hours and rising domestic cash prices.
The benchmark January 2009 soybean contract settled RMB24 higher at RMB3,290 a metric tonne, after trading between RMB3,244/tonne and RMB3,342/tonne.
Brazil's soy trade was lifted by the strong dollar last week at peaks of BRL2.53 on Thursday. But the dollar has weakened to BRL2.18 by the end of Tuesday due to Brazil's Central Bank intervening to strengthen the real.
With he strengthening real and weaker CBOT soybean prices Tuesday, Brazilian soy producers remain reluctant to sell.
Large multinationals such as ADM, Cargill and Bunge, as well as local crushers, have been just buying hand-to-mouth to satisfy their current needs, said Glauco Monte, an analyst at consultancy FC Stone.
Crude palm oil futures on Malaysia's derivatives exchange fell 4.7% Wednesday after Indonesia scrapped the export tax on CPO but recovered marginally on spillover strength from soybean oil, said trade participants.
The benchmark January contract on the Bursa Malaysia Derivatives ended MYR24 lower at MYR1,435 a metric tonne, off an intraday low of MYR1,391/tonne.