October 6, 2008


CBOT Soy Outlook on Monday: Down 65-70 cents on global economic woes



Soybean futures on the Chicago Board of Trade are expected to open sharply lower, tumbling on speculative liquidation attributed to global economic turmoil.


CBOT soybean futures are called 65 to 70 cents lower.


In overnight electronic trading, November soybeans were 65 cents lower at US$9.27. December soyoil was 233 points lower at 40.17 cents per pound and December soymeal was US$16.30 lower at US$253.50 per short tonne.


The crisis gripping world financial markets is the key influence heading into Monday's day session, a CBOT floor analyst said. All eyes will be glued to outside markets, with fundamentals taking a back seat once again, he added.


The U.S. dollar is higher and crude oil futures are posting sharp losses in early trading. Palm oil futures and Chinese soybean markets tumbled overnight as well.


Traders said favorable weekend weather allowed for an active harvest and maturation of late developing U.S. crops. However, oversold market conditions are expected to limit losses on any sign of stabilizing outside financial market influences.


A technical analyst said the next upside price objective for November soybeans is to push and close prices above solid technical resistance at the April low of US$10.45 1/4 a bushel. The next downside price objective is pushing and closing prices below solid technical support at US$9.50.


First resistance for November soybeans is seen at US$10.00 and then at Friday's high of US$10.23 3/4. First support is seen at Friday's low of US$9.91 1/4 and then at US$9.75.


The DTN Meteorlogix weather forecast said rain early this week in the U.S. Midwest will likely mean delays to field work and harvesting. Frost and isolated freezing temperatures in the northern part of the eastern Midwest during the weekend probably did little damage to crops, Meteorlogix said.


The longer range outlook is somewhat uncertain Monday due to differences between the forecast models. The U.S. model suggests a significant cold snap will move in by this coming weekend to be followed by significant rain next week. The European model is somewhat warmer with the wet weather mainly in the west and north.


In demand news, the U.S. Department of Agriculture announced private exporters reported orders for 185,000 metric tonnes of U.S. soybeans to unknown destinations for delivery in the 2008-09 marketing year.


Meanwhile, traditionally large speculative traders reduced their net long positions in CBOT soybean futures and options combined contracts, which now total 13,138 contracts as of Sept. 30, compared with net longs of 22,318 in the previous week. Index funds trimmed their net long positions, which now total 130,092 contracts, down from 134,607 the prior week, according to the Commodity Futures Trading Commission, as reported Friday in its supplemental commitment of traders report. Commercials held net short combined futures and options positions totaling 108,755 contracts, down from the previous week's 125,704 contracts.


The USDA is scheduled to release its weekly export inspections report Monday at 11 a.m. EDT and its weekly crop progress report at 4 p.m. EDT.


In deliveries, October soymeal deliveries totaled 28 lots. Issuers were scattered among various commission houses, while a customer account at RJ O'Brien stopped all 28 lots. The last trade date assigned was Sept. 29.


October soyoil deliveries totaled 3,082 lots. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was Oct. 3.


In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled limit down Monday, catching up with their counterparts' 15% loss on the Chicago Board of Trade last week, when the Chinese markets were closed for the long National Day holiday. The benchmark January 2009 soybean contract settled RMB201 lower at RMB3,834 a metric tonne, or down 5.0%.


Crude palm oil futures on Malaysia's derivatives exchange fell as much as 11% Monday as estimates showed a surge in inventory, and on spillover impact from new U.S. biodiesel tax rules, weaker soyoil and crude oil. The benchmark December contract on Bursa Malaysia Derivatives ended MYR180 lower at MYR1,820 a metric tonne, off an intraday low of MYR1,775, a level not seen since November 2006.

Video >

Follow Us