September 9, 2008


CBOT Soy Outlook on Tuesday: Down 20-25 cents, outside market weakness weighs



Soybean futures at the Chicago Board of Trade are poised for a lower opening in day session trading, retreating in tune with overnight action amid weakness in outside markets and a lack of fresh supportive factors.


CBOT soybean futures are called 20 to 25 cents lower.


In overnight electronic trading, September soybeans were 22 1/2 cents lower at US$11.72, and November soybeans were 25 cents lower at US$11.67. December soyoil was 89 points lower at 48.35 cents per pound and December soymeal was US$6.10 lower at US$322.20 per short tonne.


Speculative selling is seen as the catalyst for early losses, as disinvestment in commodities regains momentum as investors reduce risk exposure in the absence of a bullish spark, analysts said.


Crude oil and precious metals are pointing lower and with export demand soft, futures remain vulnerable to outside influences, a CBOT floor analyst said.


However, a weaker U.S. dollar in early morning action coupled with the unknowns surrounding 2008 U.S. soybean yields, downside risks may be limited, analysts added.


U.S. soybean condition ratings held steady last week, according to the U.S. Department of Agriculture's weekly crop progress report released Monday. The USDA rated 57% of the soybean crop as good-to-excellent, unchanged from last week. Traders had expected the score to stay steady or drop as much as two percentage points.


The USDA said 97% of the crop was setting pods, down slightly from 99% last year and the average of 99%. The USDA said 10% of the crop was dropping leaves, down from 27% last year and the average of 21%.


There remains some maturity issues for the soybean crop, and it could become a big issue if cold weather comes down from Canada and brings a killing frost before crops reach potential, said Greg Wagner analyst with AgResource Company.


A technical analyst 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 the May low of US$11.64 3/4.


First resistance for November soybeans is seen at US$12.00 and then at US$12.25. First support is seen at Monday's low of US$11.70 and then at US$11.64 3/4.


The DTN Meteorlogix weather forecast said temperatures as cool as 37 or 36 degrees Fahrenheit is possible early this morning in parts of southern Minnesota and northern Iowa. Shower activity from Monday's cold front and additional showers during the coming days will favor filling crops. Crops should continue to mature as temperatures stay above freezing during the next 10 days, Meteorlogix said.


In the U.S. Delta, Hurricane Ike may bring rains to the region during this coming weekend. However, compared to Monday's forecast this rain forecast is more uncertain, Meteorlogix added.


In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled sharply lower Tuesday on a strengthening dollar. The benchmark January 2009 soybean contract settled RMB100 lower at RMB4,026 a metric tonne.


Crude palm oil futures on Malaysia's derivatives exchange hit a fresh one-year low Tuesday on heavy liquidation pressure ahead of monthly government data on supply and spillover weakness from soyoil and crude prices, said trade participants. The benchmark November contract on Bursa Malaysia Derivatives ended MYR115 lower at MYR2,354/tonne.

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