September 2, 2008
CBOT Soy Outlook on Tuesday: Down sharply on crude, weather pressure
Sharply lower crude oil and good crop weather are expected to push Chicago Board of Trade soybean futures lower Tuesday.
Soybeans are called 65 to 70 cents lower. In overnight trading, September soybeans were down 65 cents to US$12.67 per bushel and December soybeans were down 66 1/4 cents to US$12.57 3/4.
December soyoil was down 216 points to 52.04 cents per pound and December soymeal was down US$18.80 to US$339.20 per short tonne.
Soybeans are expected to follow crude oil, which has fallen below US$110 per barrel after Hurricane Gustav appeared to pass through key U.S. Gulf coast oil regions without causing significant damage.
"Selling in beans was given a temporary reprieve last week on strength from Gustav and the energy market, despite better than expected rains in Iowa, Illinois and Indiana," Farm Futures said in a morning commentary. "With more rain in the forecast this week and energy prices plunging, down is the path of least resistance."
DTN Meteorlogix said more rain is needed for pod filling soybeans in some areas of the Midwest, especially through the east, while recent showers through the west is generally favorable.
Western areas are expected to see more rain Tuesday and Wednesday, and the remnants of Gustav may move north through Illinois later this week, providing more beneficial rain.
The plunging crude oil and a rising U.S. dollar make for a bearish environment for soybeans as well as other grains markets, analysts said.
"You're getting the same thing we've had for a long time here, just general commodity liquidation," an analyst said.
The weather and crude oil are a "one-two punch" for soybeans Tuesday, he added.
The next upside price objective for the bean bulls is to push and close prices above solid technical resistance at last week's high of US$13.74 1/2 a bushel, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below psychological support at US$13.00.
Farm Futures said soybeans should begin to find support at limit down levels, but that "there's plenty of air below the market technically for prices to move lower."
Speculative funds added 3,979 contracts to their CBOT soybean long positions and cut 1,430 contracts from their short positions, putting them net long 40,818 contracts, the Commodity Futures Trading Commission said Friday.
The supplemental commitment of traders report also showed commercial funds cut 18,282 contracts from their long positions and 10,986 from their short positions, putting them net short 153,803 contracts. Index funds added 297 contracts to their long positions and 262 contracts to their short positions, putting them net long 140,604 contracts, the CFTC said.