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December 16, 2008

 

CBOT Soy Outlook on Tuesday: Up 5-7 cents; overnight theme, outside support

 

 

Soybean futures on the Chicago Board of Trade are expected to start Tuesday's day session higher, following the overnight theme with weakness in the U.S. dollar and firmer crude oil supporting prices.

 

CBOT soybean futures are called 5 cents to 7 cents higher.

 

In overnight electronic trading, January soybeans ended 8 cents higher at US$8.54. January soymeal was US$1.50 higher at US$258.30 per short tonne, while December soyoil ended 19 points higher at 30.74 cents per pound.

 

A quiet news front is seen keeping macro economic factors in focus, with thinning volume heading toward the holidays opening the door for two-sided trade, analysts said.

 

End-of-the-year position squaring provides potential for short covering, with profit taking on some corn/soybean spreads aiding the higher tone as well, analysts added.

 

Underlying export demand and South American weather issues are fundamentally supportive, but in the midst of uncertain global economics, traders are seen taking a cautious approach to the market.

 

A technical analyst said the next upside price objective for January soybeans is to push and close prices above psychological resistance at US$9.00 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$8.00 a bushel.

 

First resistance for March soybeans is seen at last week's high of US$8.65 3/4 and then at Monday's high of US$8.79 3/4. First support is seen at US$8.41 1/4 and then at US$8.30.

 

The DTN Meteorlogix weather forecast said hot and mostly dry conditions are expected to continue through Saturday in Argentina's major corn and soybean areas. Showers forecast for Saturday night and Sunday along with cooler temperatures should help somewhat, however.

 

In Brazil, showers through the northern growing region will favor developing crops, while drier weather is seen for southern areas during the period.

 

In other news, China's Ministry of Finance said in a statement published on its Web site Tuesday that the country scrapped a value-added tax on soybean exports, which analysts said was 13% on Dec. 1. The goal of the move is to ease price pressure on ample domestic soybean supplies, but China isn't likely to sharply increase exports because most of its output is of limited demand in the global market, said Li Honglei, an analyst at Nanhua Futures Co.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Tuesday in a partial correction after rising for six consecutive sessions. The benchmark May 2009 soybean contract settled down RMB51, or 1.7%, at RMB3,035 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Tuesday in cautious, range bound trade, said trade participants. The benchmark March CPO contract on Bursa Malaysia Derivatives ended MYR35 lower at MYR1,545/tonne.
   

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