September 24, 2008

 

CBOT Soy Outlook on Wednesday: Seen up on supportive outside markets

 

 

The influence of outside markets is seen leading Chicago Board of Trade soybean futures higher to start Wednesday's day session.

 

CBOT soybean futures are called 15 to 20 cents higher.

 

In overnight electronic trading, November soybeans were 17 1/2 cents higher at US$12.04 1/2. December soyoil was 50 points higher at 48.73 cents per pound and December soymeal was US$4.50 higher at US$334.50 per short tonne.

 

Firm crude oil and precious metal futures, coupled with a weaker U.S. dollar index in early action, are sending positive signals to buyers, with outside commodity and financial markets continuing to keep fundamental features in the background, a CBOT floor analyst said.

 

The underlying economic uncertainties associated with the turmoil in financial markets will limit some participation, as traders remain hesitant to take on added risk with the macro economic outlook unclear, he added.

 

The trade will keep a close eye on testimony from the top two U.S. money men as they continue to push for a US$700 billion bailout plan for the financial sector. Federal Reserve Chairman Ben Bernanke goes before the Joint Economic Committee of Congress to testify on the economic outlook at 10 a.m. EDT.

 

Both Bernanke and U.S. Treasury Secretary Henry Paulson are due to testify before the House Financial Services Committee, starting at 2:30 p.m. EDT, on the future of financial services.

 

Fundamentally, tight U.S. stocks and uncertainty surrounding 2008 U.S. soybean yields remain supportive, but near term weather is bearish with warm, dry conditions conducive for maturing crops and harvesting.

 

Meanwhile, U.S. Department of Agriculture on Wednesday morning announced private exporters reported the sale of 180,000 metric tonnes of U.S. soybeans to China in the 2008-09 marketing year.

 

A market technician said the next upside price objective for November soybeans is to push and close prices above solid technical resistance at the last "reaction high" of US$12.22 1/2 a bushel. The next downside price objective for the bears is pushing and closing prices below solid technical support at the August low of US$11.68.

 

First resistance for November soybeans is seen at US$12.00 and then at this week's high of US$12.12. First support is seen at the August low of US$11.68 and then at US$11.50.

 

The DTN Meteorlogix weather forecast said warm and mostly dry weather continues to favor maturing crops for at least another 4 to 5 days in U.S. Midwest. After that it looks somewhat cooler and possibly wetter. This would be unfavorable for maturing crops, especially if it gets much wetter, Meteorlogix reports.

 

In the Delta, drier, warmer weather during the next 5 days will favor soybean harvests. It may turn somewhat cooler during the 6- to 10-day period.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Wednesday, in line with a fall on CBOT and crude oil prices Tuesday. The benchmark January 2009 soybean contract settled RMB29 lower at RMB4,020 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchanged ended higher Wednesday but off highs on a likely fall in exports, said trade participants. The benchmark December contract on the Bursa Malaysia Derivatives ended MYR13 higher at MYR2,318/tonne.