December 17, 2008
CBOT Soy Outlook on Wednesday: Up 10-15 cents; overnight theme, dollar weakness
Soybean futures on the Chicago Board of Trade are expected follow the overnight trend and start Wednesday's day session on firm footing amid weakness in the U.S. dollar and technical buying.
CBOT soybean futures are called 10 cents to 15 cents higher.
In overnight electronic trading, January soybeans ended 13 3/4 cents higher at US$8.72 1/4. January soymeal was US$1.70 higher at US$262.70 per short tonne, while December soyoil ended 22 points higher at 31.57 cents per pound.
Carryover momentum from the market's recent technical bounce is seen supporting initial gains, with end-of-the-year short-covering and the macro economic influence of a lower U.S. dollar aiding the advances, analysts said.
Lingering concerns surrounding South American crops and underlying export demand remain bullish incentives to support prices.
However, with mixed signals from other outside markets, traders remain cautious about the direction of prices after the opening, with an uncertain global economic outlook continuing to limit traders' willingness to take on risk, a CBOT floor analyst said.
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 Tuesday's high of US$8.67 and then at this week's high of US$8.79 3/4. First support is seen at US$8.50 and then at Tuesday's low of US$8.43 1/4.
The DTN Meteorlogix weather forecast said western and southern crop areas of Argentina will benefit from a few showers Wednesday and Thursday. However, showers and cooler conditions may not reach major growing areas until Sunday.
In Brazil, showers expected through the northern growing region will favor developing crops, while drier weather is on tap for southern areas during the period.
In demand news, South Korea's CJ Corp. bought a total of 110,000 metric tonnes of Brazilian and U.S. soybeans from trading house Archer Daniels Midland (ADM), a company official said Wednesday. The U.S. shipment of 55,000 tonnes is expected to arrive in South Korea in February, while the Brazilian shipment is likely to reach in May.
In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday on short-covering as traders exited the market ahead of a possible cut in crude-oil output. The benchmark May 2009 soybean contract settled RMB40 higher at RMB3,075/tonne, or up 1.3%.
Crude palm oil futures on Malaysia's derivatives exchange rose Wednesday, snapping a three-day losing streak on short covering and fresh buying as investors awaited cues from an OPEC meeting later Wednesday in Algeria. The benchmark March CPO contract on Bursa Malaysia Derivatives ended MYR35 higher at MYR1,580/tonne.