September 19, 2008

 

CBOT Soy Outlook on Friday: Higher on financial market, crude support

 

 

Chicago Board of Trade soybean futures are poised to open higher Friday, following overnight gains and government action that is supporting the financial markets and crude oil.

 

Soybeans are called 10 to 12 cents a bushel higher. In overnight trading, November soybeans were up 12 1/2 cents to US$11.28 1/2 and January soybeans were up 10 1/4 cents to US$11.40.

 

December soybean oil was up 55 points to 45.45 cents per pound, while December soybean meal was up US$2.90 to US$316.70 per short tonne.

 

Analysts said the market could be supported by higher crude oil. The dollar, however, is stronger, which is usually a bearish sign for the market because it makes exports less attractive.

 

"We're not looking for the complex to open as high as the overnight trade," an analyst said.

 

As with other crops, liquidation has been a key feature of the soybean market this week, traders said, as U.S. financial turmoil has shaken investors' confidence. Open interest continued to drop in soybeans and soy oil on Thursday, a trader said.

 

"It's not being driven by fundamentals. It's that simple," a trader said of the soybean market.

 

Fears of a worldwide economic slowdown have prompted concern about weakening global demand for soybeans and other commodities, traders said. U.S. government action to ease fears, including a ban on short selling, has boosted the financial markets and could provide spillover support to soybeans, traders said.

 

Weather, while not a major factor in the market, is bearish, traders said.

 

Private weather firm DTN Meteorlogix says that "dry weather for at least the next five days along with mostly above normal temperatures will help fields recover from recent rains and will help crops continue move towards maturity." There is no significant cold weather in the forecast.

 

In the Delta, drier, warmer weather during the next five to seven days will favor soybean harvests.

 

Prices are still in a nine-week-old downtrend on the daily bar chart, a technical analyst said.

 

The next upside price objective is to push and close prices above solid technical resistance at the August low of US$11.68 a bushel. The next downside price objective for the bears is pushing and closing prices below major psychological support at US$11.00.

 

Resistance for November soybeans is seen at Thursday's high of US$11.51 1/2. First support is seen at US$11.00 and then at US$10.75.

 

Soybean futures traded on the Dalian Commodity Exchange settled lower Friday. The benchmark January 2009 soybean contract settled 37 yuan (US$5.43) lower at RMB3,830 a metric tonne after trading between RMB3,793 and RMB3,858 a tonne.

 

Also, crude palm oil futures on Malaysia's derivatives exchange ended 3.4% higher Friday on fresh buying, shrugging off projections of lower export numbers as importers scrambled to book supplies for early 2009.