September 26, 2008


CBOT Soy Outlook on Friday: Down 2-4 cents, overnight theme, outside markets eyed



Soybean futures on the Chicago Board of Trade are poised for a lower start, taking its cue from overnight price action, with traders watching outside markets amid lingering economic concerns.


CBOT soybean futures are called 2 to 4 cents lower.


In overnight electronic trading, November soybeans were 2 cents lower at US$11.81. December soyoil was 25 points lower at 48.04 cents per pound and December soymeal was US$0.60 lower at US$327.90 per short tonne.


The market lacks any conviction at this point, as it remains a bit jittery, with traders unwilling to take on added risk with U.S. government bailout out package for the financial sector still up in the air, said a CBOT floor analyst.


Outside markets are providing mixed signals, with crude oil and the U.S. dollar index lower and precious metals higher in early action.


The uncertainty of U.S. production and yields is promoting mixed thoughts as well, but favorable weather for harvesting in the southern Midwest and weakening cash prices are seen applying some price pressure, analysts said.


Otherwise a quiet news front will keep traders watching Congress for signs of an agreement on a package to avert further economic crises, with some traders saying the market is setting up for another two-sided session.


A technical analyst 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 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 US$11.68 and then at US$11.50.


The DTN Meteorlogix weather forecast said favorable weather continues for another 3 to 5 days in the U.S. Midwest, after that, unfavorable conditions for maturing crops will surface. First as it concerns somewhat colder conditions through the middle of next week and then as it concerns potential wet conditions at the end of the week. A significant freeze from this colder weather is not anticipated, but frost and a light freeze can not be ruled out, especially in the northern areas.


In the U.S. 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, Meteorlogix said.


In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled slightly higher Friday, consolidating in a narrow range in the last session ahead of next week's long holiday. The benchmark January 2009 soybean contract settled RMB6 higher at RMB4,035 a metric tonne.


China's cash soybean prices in major producing areas were stable in the week ended Friday, as processing plants mostly stayed on the sidelines, awaiting the harvest season.


Crude palm oil futures on Malaysia's derivatives exchange ended 1.4% higher in choppy trade Friday amid liquidation pressure, said trade participants. The benchmark December contract on the Bursa Malaysia Derivatives ended MYR33 higher at MYR2,313 a metric tonne.

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