November 27, 2009

 

CBOT Soy Outlook on Friday: Down 18-22 cents on dollar, broad-based weakness

 

 

Chicago Board of Trade soybean futures are poised for a lower start to Friday's day session, under pressure from broad-based weakness attributed to news of Dubai's debt crisis.

 

CBOT soybean futures are seen starting 18 to 22 cents lower. In overnight trade, January soybeans were 21 3/4 cents lower at US$10.32 3/4, and March soybeans were 22 1/2 cents lower at US$10.38 1/4.

 

The market lost more than 2% of its value overnight, as investor confidence was shaken by concerns about Dubai's creditworthiness announcement. Dubai World, the city state's largest corporate entity, late Wednesday asked creditors for a six-month stay on repayment of its debts.

 

"Today's trade is likely to take the same path as the overnight session with technically-related selling hitting the markets hard," said Mike Zuzolo, president Global Commodity Analytics and Consulting.

 

The U.S. dollar is higher, crude oil futures are down more than 5%, gold is down nearly 3% and silver is off more than 4% in early trade.

 

The market will trim some of its prior gains in a shortened trading session, trying to find price support.

 

The U.S. dollar is the big variable Friday, with traders eyeing its movement as well as waiting news on the Dubai debt situation for clues to price direction, said Victor Lespinasse, analyst with Grainanalyst.com.

 

Strong weekly export sales and shipments will provide support to prices, and without the pressure from outside markets, soybeans would probably start higher, Lespinasse said.

 

Bullish traders will look for the cooling of global economic fears before aggressively pushing prices, waiting for signs that the worst fears of Dubai's debt crisis have subsided.

 

A technical analyst said first resistance for January soybeans is seen at US$10.40 and then at US$10.50. First support is seen at the overnight low of US$10.21 and then at US$10.10.

 

The U.S. Department of Agriculture reported total weekly soybean export sales were a net 1,135,300 metric tonnes for the week ended Nov. 19. The primary buyer was China with 859,800 tonnes. Analysts had forecast sales between 800,000 and 1,100,000 metric tonnes.

 

USDA reported a marketing year high 2,434,500 metric tonnes were shipped in the week ended Nov. 19, with China the primary destination for 1,835,500 tonnes.

 

Soymeal sales were a net 225,200 tonnes. Trade estimates ranged from 150,000 to 250,000 tonnes. Soyoil commitments were 19,200 metric tonnes. Analysts had forecast sales between 5,000 and 20,000 tonnes.

 

CBOT markets will trade an abbreviated day session Friday. The market will close at 1 p.m. EST.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Friday, as investors took profit after Dubai's debt problems triggered losses in global equities and commodities. The benchmark September 2010 soybean contract settled RMB25 a metric tonne lower at RMB3,935/tonne.