November 21, 2007

 

CBOT Soy Outlook on Wednesday: Down 5-7 cents; e-CBOT, pre-holiday positioning

 

 

Soybean futures on the Chicago Board of Trade are expected to start Wednesday's day session on the defensive, in tune with overnight declines with pre-holiday positioning featured.

 

The U.S. dollar index is lower, and crude oil and metal futures are higher.

 

CBOT soybean futures are called to start the session 5 to 7 cents lower.

 

In overnight e-CBOT trading, January soybeans were 7 cents lower at US$10.80 per bushel, and March soybeans were 8 cents lower at US$10.95 1/2.

 

The market is poised for a lower start, influenced by profit taking from recent gains heading into the Thanksgiving Day holiday, analysts said.

 

With Wednesday and Friday's sessions closing early, and the closure of the market on Thursday, traders are expected to square a few positions to reduce some risk exposure, analysts added.

 

CBOT grains and oilseed futures close at 1 p.m. EST Wednesday and Friday and will be closed Thursday in observance of the Thanksgiving holiday.

 

Meanwhile, a pull back in outside inflationary markets from highs overnight is expected to trigger some speculative sales as well, traders added. Crude oil rallied to new all time highs of US$99.29 a barrel and gold futures climbed to US$8.06 an ounce in nearby contracts before retreating. Crude oil and gold is currently trading near US$98.54 and US$800 respectively, analysts said.

 

However, traders will continue to monitor movements in outside markets for direction amid the absence of fresh news, but positioning ahead of the holiday is poised to be the feature of the day, a CBOT floor broker said.

 

A technical analyst said the next upside price objective for January soybeans is to push and close prices above major psychological resistance at US$11.00 a bushel. The next downside price objective is closing prices below strong support at US$10.62 1/4, which is the bottom of an upside price gap on the daily bar chart.

 

First resistance for January soybeans is seen at Tuesday's high and the contract high of US$10.88 and then at US$11.00. First support is seen at US$10.80 and then at this week's low of US$10.70.

 

The DTN Meteorlogix Weather Service said drier weather in Brazil's Rio Grande do Sul and Parana states through Friday will improve conditions for planting soybeans. However, some rain is expected to return over the weekend. Generally favorable conditions for planting and developing soybeans are seen for Mato Grosso.

 

In other news, 31% of Brazil's 2007-08 soy crop has been sold as of Nov. 16, agribusiness consultancy Celeres said late Tuesday. Celeres estimates that Brazil soy growers will be planting around 22 million hectares of soybeans this season, with total output of around 63.4 million metric tonnes. Their number is the highest of all current market estimates, which are as low as 58 million tonnes.

 

Meanwhile, surging vegetable oil prices in China and typically stronger year-end demand in the world's most populous country will prompt importers to buy more soybeans, traders and analysts said.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly higher Wednesday, after CBOT soybeans rallied Tuesday and crude oil futures surged to new highs of almost US$100 a barrel. But the benchmark September 2008 soybean contract settled RMB29 lower at RMB4,368 a metric tonne.

 

Crude palm oil futures traded on Malaysia's derivatives exchange ended higher Wednesday, driven mainly by rise in crude oil prices and buoyant palm oil exports, trade participants said. The benchmark February contract on Bursa Malaysia Derivatives ended MYR40 higher at MYR2,970 a metric tonne.