October 1, 2008


CBOT Soy Outlook on Wednesday: Up 5-7 cents, overnight theme, oversold



Soybean futures on the Chicago Board of Trade are seen starting Wednesday's day session higher, with traders anticipating a price bounce on ideas recent losses are overdone.


CBOT soybean futures are called 5 to 7 cents higher.


In overnight electronic trading, November soybeans were 6 1/2 cents higher at US$10.51 1/2. December soyoil was 22 points higher at 44.70 cents per pound and December soymeal was US$1.50 higher at US$286.50 per short tonne.


The market is poised for a modest bounce following a US$1.19 a bushel drop this week, with the lingering uncertainties of 2008 production and yield providing some underlying support, said Vic Lespinasse, analyst with grainsanalyst.com.


Tuesday, the most active November contract slid to a nearly ten-month low.


A quiet news front isn't providing directives for prices, but weakness in crude oil futures and strength in the U.S. dollar in early trading is expected to limit buyer's enthusiasm.


Otherwise, traders will keep a close eye on the bailout plan for the financial sector, with the U.S. Senate expected to vote on rescue bill legislation Wednesday.


A market technician said the next upside price objective for November soybeans is to push and close prices above psychological resistance at US$11.00 a bushel. The next downside price objective is pushing and closing prices below major psychological support at US$10.00.


First resistance for November soybeans is seen at US$10.70 and then at Tuesday's high of US$10.96. First support is seen at Tuesday's low of US$10.39 and then at US$10.25.


The DTN Meteorlogix weather forecast said no significant cold weather is seen for the U.S. Midwest during the next 10 days. Despite a slight risk for patchy frost in the north, crops should be allowed mature slowly during this period. Any chance for wet weather slowing early harvests is mostly in the west and mostly late in the 10 day period.


In the U.S. Delta, mainly open weather during at least the next 5-6 days will favor soybean harvests. This drier pattern may continue longer as neither the U.S. nor the European models show much rain for this region beyond day 6, Meteorlogix said.


In deliveries, Oct soymeal deliveries totaled 333 lots. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was September 19.


Oct soyoil deliveries totaled 3,728 lots. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was September 30.


Brazilian soy trade remains slow as producers remain price wary and traders can't convince farmers to sell old- or new-crop soybeans this week. As it is, soy prices for the export market in Brazil have been falling all week, now down to 47 Brazilian reals (US$24.70) per 60-kilogram bag out of the Paranagua Port in Parana state, and BRL47.50 in Santos, the top two ports.

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