September 5, 2008


CBOT Soy Outlook on Friday: Down 25-35 cents; Midwest weather, outside factors



Soybean futures at the Chicago Board of Trade are expected to start Friday's day session lower, following through on the overnight theme, with weakness in crude oil and improved Midwest rain adding pressure.


CBOT soybean futures are called 25 to 35 cents lower.


In overnight electronic trading, September soybeans were 20 3/4 cents lower at US$12.13 1/4 and November soybeans were 37 1/4 cents lower at US$11.97 3/4. December soyoil was 87 points lower at 49.37 cents per pound and December soymeal was US$10.70 lower at US$331.30 per short tonne.


Outside market influences continue to shape direction in the market, but with beneficial weather moving through Illinois and heading east should apply pressure, as its provides good finishing conditions for late planted crops, said Jack Scoville, analyst with Price Futures Group.


Speculative selling has been featured recently, as the absence of fresh supportive news has left little for buyers to sink their teeth into, traders said.


Weekly export sales were mildly supportive to prices, but the market seemingly has not reached a near-term low yet, Scoville added.


A technical analyst said 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 major psychological support at US$12.00.


First resistance for November soybeans is seen at US$12.50 and then at Thursday's high of US$12.61. First support is seen at this week's low of US$12.29 and then at US$12.00.


The DTN Meteorlogix weather forecast said rains associated with tropical depression Gustav covered most of the major crop areas of Illinois Thursday and overnight. Filling soybeans should benefit from this rain. However, eastern Indiana and Ohio will miss out on this rain. Cooler conditions continue into next week, slowing the maturation of crops...especially in the west, but there is no significant risk of frost during the next 7 to 10 days, Meteorlogix reports.


In the Delta, heavy rains associated with Gustav will delay and disrupt the soybean harvest. Hurricane Ike will have to be watched closely. The early call on this has it staying away from the Delta but there is an outside chance that this would change, Meteorlogix said.


The U.S. Department of Agriculture reported total weekly soybean export sales were a net 280,500 metric tonnes. Analysts had forecast sales between 200,000 and 550,000 metric tonnes. Sales for the 2008-09 marketing year were 236,300 tonnes, with the primary buyer China with 60,000 tonnes.


Soymeal sales were a net 147,700 tonnes, above trade estimates of 15,000 to 125,000 tonnes. Soyoil commitments were a net sales reduction of 7,900 metric tonnes. Analysts had forecast sales between zero and 15,000 tonnes.


U.S. private exporters sold 110,000 metric tonnes of soybeans for delivery to South Korea in the 2008-09 marketing year, USDA said Friday.


Allendale Inc. estimates the 2008 U.S. corn crop at 12.090 billion bushels and U.S. soybean crop at 2.818 billion bushels, the brokerage firm said on Friday. Allendale also estimates corn yields at 152.48 bushels per acre, based on harvested acreage of 79.29 million acres. Soybean yields are estimated at 38.43 bushels, based on harvested acreage of 73.43 million acres. The production estimates are based on producer-calculated yields in 20 states conducted from Aug. 15 through Aug. 29, 2008, the firm said.


In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Friday, tracking Thursday's decline in their counterparts at CBOT. The benchmark January 2009 soybean contract settled RMB60 lower at RMB4,112/tonne, or 1.4%.


Cash soybean prices in China's major producing areas were stable in the week to Friday amid light trading, as buyers stayed on the sidelines ahead of the new harvest season.


Crude palm oil futures on Malaysia's derivatives exchange ended 1.6% lower Friday amid volatile trading on liquidation pressure as investors took leads from weak soyoil and crude. The benchmark November contract on Bursa Malaysia Derivatives ended MYR40 lower at MYR2,470 a metric tonne.

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