September 10, 2008

 

CBOT Soy Outlook on Wednesday: Lower on overnight, mixed tone expected

 

 

Soybean futures at the Chicago Board of Trade are poised for a lower start to Wednesday's day session based off overnight action, but traders anticipate a choppy tone amid mixed market signals.

 

CBOT soybean futures are called 4 to 6 cents lower.

 

In overnight electronic trading, September soybeans were 8 cents lower at US$12.01 and November soybeans were 3 1/4 cents lower at US$11.97 3/4. December soyoil was 31 points lower at 48.50 cents per pound and December soymeal was US$0.50 higher at US$334.50 per short tonne.

 

The overnight theme is pointing to a lower resumption of trading, with a firmer U.S. dollar, a lack of fresh supportive news, and soft export demand keeping buyers hesitant in the face of recent speculative selling attributed to economic jitters, analysts said.

 

However, lingering uncertainty tied to 2008 soybean output, firmer crude oil futures and oversold conditions are expected to attract short-covering in a bear market on any sign of exhausted speculative selling, analysts added.

 

Light position evening ahead of Friday's crop reports and the threat of frost in the Midwest late next week are additional features seen generating some underlying support to limit losses and promote a mixed tone, a CBOT floor broker said.

 

A market technician 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 Tuesday's high of US$12.04 3/4 and then at US$12.25. First support is seen at US$11.70 and then at Tuesday's low of US$11.57.

 

The DTN Meteorlogix weather forecast said Midwest crops should continue to mature as temperatures stay above freezing during the next 10 days. Rainfall at the end of this week and during the weekend should favor filling crops, especially through southern and eastern areas, Meteorlogix reports.

 

In the Delta, rainfall associated with hurricane Ike and its induced surface trough should track through this area during the weekend, Meteorlogix added.

 

Looking ahead, U.S. Department of Agriculture is scheduled to release its August crop report Friday 8:30 a.m. EDT (1230 GMT). The average of analysts estimates projects a crop size of 2.950 billion bushels with a yield of 40.2 bushels per acre. The averages ranged from 2.818 billion to 3.035 billion bushels for production and 38.4 to 41.4 for yields. The USDA in August pegged the crop at 2.973 billion bushels using a yield of 40.5 bushels an acre.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly higher Wednesday on gains in Chicago CBOT soybeans Tuesday. The benchmark January 2009 soybean contract settled RMB7 higher at RMB4,033 a metric tonne.

 

China's soybean imports in the first eight months of 2008 totaled 24.56 million metric tonnes, up 24% from a year earlier, according to initial data issued by the General Administration of Customs Wednesday. Soybean imports in August were 3.83 million tonnes, Customs said.

 

Crude palm oil futures on Malaysia's derivatives exchanged ended at a fresh one-year low Wednesday, as investors took cues from a fall in exports and weak price outlook projections. The benchmark November contract ended MYR25 lower at MYR2,329 a metric tonne.