August 22, 2008


CBOT Soy Outlook on Friday: Seen weaker on outside markets, weather



Soybean futures on the Chicago Board of Trade are called to open Friday's day session lower as a flip-flop in dollar-crude oil performance overnight resulted in a stronger dollar, which is bearish for commodities, and weaker crude.


CBOT soybean futures are called 5-7 cents lower. But investors will be watching the direction of outside markets as they move toward the day's opening trades, a CBOT floor trader said.


Gains of nearly US$6 in crude oil and a weaker dollar Thursday supported a rally in beans.


But the rally began selling off in overnight electronic trading. September soybeans lost 4 1/4 cents to US$13.36 3/4 and November soybeans dropped 6 cents to US$13.42. December soyoil was 28 points higher at 56.07 cents per pound, while December soymeal gained US$1.30 at US$360 per short tonne.


Ideas that forecast rain will replenish crops, the direction of outside markets and an "overdone" rally Thursday all present bearish signals, a CBOT floor trader said.


"We'll see how the outside markets move as we move closer to the open and wait for this crop report," the trader said, referring to the 2008 Pro Farmer Midwest Crop Tour crop report due out at 10 a.m. EDT Friday.


After gaining "solid upside near-term momentum" the next objective for soybean bulls is to push and close above the US$14 psychological resistance level, a market technician said.


He sees first resistance at Thursday's high of US$13.69 1/2, he said.


As the bears move to penetrate the US$13 psychological barrier, first support lies at US$13.41 and then US$13.25, the technician said.


Scouts on the eastern leg of the Pro Farmer tour traveled northeast from Iowa City to Marshalltown before heading due north found inconsistent corn and soybean crops in the central part of the state. Scouts noted some fields that had been flooded out and others with blank spots.


The soybean pod count dropped 10.4% over the previous year's average for the area.


In Minnesota, scouts found good soybean vegetation. Tour participants in both state have echoed the same refrain throughout their four-day trek: The plants need rain and an extended growing season to reach their full potential.


Showers totaling less than an inch are expected in the central and western parts of the Corn Belt on Friday, according to DTN Meteorlogix.


The private weather firm forecast continued dryness in the eastern Corn Belt.


In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Friday.


The benchmark January 2009 soybean contract settled RMB22 higher at RMB4,312 a metric tonne, or up 0.5%, after trading in a RMB4,267-RMB4,357/tonne range.


Crude palm oil futures on Malaysia's derivatives exchange ended 2.3% higher Friday, breaking above MYR2,700 a metric tonne as spillover support from soyoil and crude oil prompted follow-through buying, trade participants said.


The likelihood of more shipments from Malaysia before the cut in Indonesia's palm oil export taxes come into force Sept. 1 also buoyed sentiment.


The benchmark November contract on Bursa Malaysia Derivatives ended MYR62 higher, at MYR2,715 a metric tonne, off a two-week intraday high of MYR2,753 reached earlier in the day.


Argentine farmers are scheduled to stage large rallies on Saturday.

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