August 15, 2008

 

CBOT Soy Outlook on Friday: Down 30-35 cents; outside market influence, weather

 

 

Soybean futures on the Chicago Board of Trade are called to open Friday's day session sharply lower, taking its cue from the overnight theme, with bearish outside market influences and favorable near term weather applying pressure.

 

CBOT soybean futures are called 30 to 35 cents lower.

 

In overnight electronic trading, September soybeans were 34 3/4 cents higher at US$12.30 1/2 and November soybeans were 33 cents lower at US$12.41. December soyoil was 158 points lower at 51.32 cents per pound and December soymeal was US$6.80 lower at US$340.70 per short tonne.

 

The market is continuing its correction from Wednesday's limit up move, with broad based commodity liquidation seen from a stronger U.S. dollar index and weakness in crude oil and precious metals, a CBOT floor analyst said.

 

Speculative fund activity will play a key role in price direction, with slowing world economic growth, and waning usage from the domestic and export sectors aiding the lower theme, analysts added.

 

However, the uncertainties of the 2008 U.S. soybean crop, with the need for an extended growing season, remains an underpinning feature as the market will continue to focus on the fundamental factors of tight projected stocks, traders said.

 

A market technician said prices are still in a five-week-old downtrend on the daily bar chart. The next upside price objective for November soybeans is to push and close prices above psychological resistance at US$13.00 a bushel. The next downside price objective is pushing and closing prices below solid technical support at Thursday's low of US$12.41.

 

First resistance for November soybeans is seen at US$13.00 and then at Thursday's high of US$13.07. First support is seen at US$12.50 and then at US$12.41.

 

The DTN Meteorlogix weather forecast said mostly favorable conditions are seen for Midwest soybeans in most areas at this time. The exception may be that southern Minnesota is somewhat too dry. There is little rainfall in the forecast during the next 5 days. There is some chance for rainfall during the six- to ten-day period but this is somewhat uncertain.

 

In the U.S. Delta, a recent increase in shower activity and less hot weather has improved the outlook for soybeans in this region. However, more rain is still needed, Meteorlogix added.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled sharply lower Friday on falling crude oil prices and a stronger dollar. The benchmark January 2009 soybean contract settled RMB138 lower at RMB4,064/tonne, or down 3.3%.

 

Cash soybean prices in China's major producing regions were lower in the week to Friday as futures prices tumbled.

 

Chinese importers booked four to six cargoes of soybeans this week, according to data from commodity consultancy firm Shanghai JCI Friday. The cargoes, which are mostly from the U.S. and Argentina, are to be delivered in September, October and December, it said.

 

Crude palm oil futures on Malaysia's derivatives exchange fell as much as 8.7% and ended 6.4% lower Friday at their lowest level in almost a year amid heavy defaults by buyers in the cash market. The benchmark October contract on the Bursa Malaysia Derivatives ended MYR167 lower at MYR2,453/tonne.