December 5, 2008
CBOT Soy Outlook on Friday: Seen lower on global economic woes
Global economic woes, coupled with a lack of fresh supportive fundamental news, sets the stage for Chicago Board of Trade soybean futures to continue on a downward path to start Friday's day session.
CBOT soybean futures are called 4 cents to 6 cents lower.
In overnight electronic trading, January soybeans ended 5 1/4 cents lower at US$8.05 3/4. January soymeal were US$2.80 lower at US$242.70 per short tonne, while December soyoil ended unchanged at 29.50 cents per pound.
The dominant factor in the market remains the worsening economic picture, with crude oil sliding, equity markets retreating and a firm U.S. dollar, a bearish cloud is hanging over the market, said Jason Roose, analyst with U.S. Commodities.
A grim U.S. jobs report released Friday was latest economic news highlighting the distressed state of the U.S. economy.
Follow-through selling from Thursday's drop to contract lows is seen adding pressure, with a lack of weather threat for South American crops and concerns over futures export demand additional features aiding the defensive tone.
However, oversold market conditions and underlying commercial buying on break is expected to limit downside pressure, traders said. Nevertheless, it will be tough to launch any pre-weekend rally, with end-users staying in a hand to mouth buying mode until prices bottom and speculative buyers staying cautious in the face economic issues, Roose added.
A technical analyst said the next upside price objective for March soybeans is to push and close prices above solid technical resistance at US$8.75 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$8.00 a bushel.
First resistance for January soybeans is seen at Thursday's high of US$8.34 and then at US$8.44. First support is seen at Thursday's low of US$8.08 and then at US$8.00.
The DTN Meteorlogix weather forecast said scattered showers and thunderstorms continue to be in the forecast for Argentina Tuesday and Wednesday of next week. This will maintain more favorable conditions for planting and developing corn, soybeans and sunflowers.
December soyoil deliveries totaled 380 lots. The house account at ADM Investor Services issued 311 lots, while a customer account at ADM Investor Services stopped 173 lots. The last trade date assigned was Nov. 14.
In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled sharply lower Friday on a gloomy global economic outlook and weak demand amid ample supply. The benchmark May 2009 soybean contract settled RMB142 lower at RMB2,908/tonne, or down 4.7%.
Cash soybean prices in China's major producing areas were lower in the week ended Friday in very light trade, as most processing plants in these areas stayed on the sidelines due to the still high prices of domestic soybeans.
Crude palm oil futures on Malaysia's derivatives exchange fell as much as 4.5% Friday, but erased all the losses on short covering ahead of the weekend, trade participants said. The benchmark February contract on the Bursa Malaysia Derivatives ended MYR37 higher at MYR1,499 a metric tonne after reaching an intraday low of MYR1,396.