August 13, 2008


CBOT Soy Outlook on Wednesday: Up 4-6 cents; follow-up buying, crop uncertainty



Soybean futures on the Chicago Board of Trade are poised for a higher start to Wednesday's day session, buoyed by follow-through technical buying and lingering crop uncertainties.


CBOT soybean futures are called 4 to 6 cents higher.


In overnight electronic trading, August soybeans were 2 cents higher at US$12.22 and November soybeans were 6 cents higher at US$12.20. December soyoil was 47 points higher at 51.25 cents per pound and December soymeal was US$0.50 lower at US$331.50 per short tonne.


A continuation of Tuesday's firm close is set to lift prices in early action, with the trade plugging in bullish crop numbers providing fundamental support, a CBOT floor analyst said.


The crop report is out of the way and focus is shifting back to the market's tight carryover forecasts, analysts said. "The market looks as if the worst is behind it after a US$4.00 break in prices, and with no room for error with weather for the rest of the growing season, futures have seemingly found support," a floor analyst added.


Meanwhile, the trade remains worried about outside market influences, with energies and precious metals higher and the U.S. dollar index lower in early trade. From a technical standpoint, the ability of the most active November future to settle above the psychological US$12.00 a bushel level was seen as supportive, traders said.


A market technician said the next upside price objective for November soybeans is to push and close prices above solid technical resistance at US$12.50 a bushel. The next downside price objective is pushing and closing prices below solid technical support at this week's low of US$11.68.


First resistance for November soybeans is seen at Tuesday's high of US$12.25 and then at US$12.50. First support is seen at US$12.00 and then at Tuesday's low of US$11.83.


The DTN Meteorlogix weather forecast calls for mostly favorable conditions for reproductive to filling corn and soybeans in most U.S. Midwest areas at this time. The exception may be that southern Minnesota is somewhat too dry in some locations. Rainfall potential in this area has diminished somewhat during the past couple of days.


In the U.S. Delta, an improving rainfall pattern will ease stress to developing soybeans, Meteorlogix reports.


In deliveries, August soybean deliveries totaled 58 lots. The house account at Bunge Chicago issued 20 lots, with stoppers scattered among various commission houses. The last trade date assigned was July 31.


In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled sharply higher Wednesday following a U.S. Department of Agriculture report that lowered estimated production. The benchmark January 2009 soybean contract settled RMB139 higher at RMB4,073 a metric tonne, or up 3.5%.


Crude palm oil futures on Malaysia's derivatives exchange ended lower Wednesday on technical selling, erasing all gains made during the day, said trade participants. The benchmark October contract on the Bursa Malaysia Derivatives ended MYR13 lower at MYR2,548 a metric tonne.

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