October 15, 2008


CBOT Soy Outlook on Wednesday: Down 1-2 cents; overnight theme, outside markets eyed



Chicago Board of Trade soybean futures are seen starting Wednesday's day session slightly lower, in tune with overnight action, as weakness in the stock market and crude oil futures remains a key influence.


CBOT soybean futures are called 1-to-2 cents lower.


In overnight electronic trading, November soybeans were 1 cent lower at US$8.95. December soyoil was 74 points lower at 37.26 cents per pound and December soymeal was US$3.40 higher at US$250.90 per short tonne.


The influence of outside markets continues to have a dominant impact on price direction, with traders expected to eye the financial sector for clues to market activity, analysts said.


A quiet news front in placing more attention on outside influences, with the absence of a frost threat despite a slower-than-expected harvest pace failing to raise eyebrows, a CBOT trader added.


A technical analyst said the next upside price objective for November soybeans is to push and close prices above major psychological resistance at US$10.00 a bushel. The next downside price objective is pushing and closing prices below major solid technical support at this week's low of US$8.81 1/2.


First resistance for November soybeans is seen at US$9.00 and then at US$9.25. First support is seen at US$8.81 1/2 and then at US$8.50.


U.S. Department of Agriculture said 51% of the U.S. soybean crop was harvested, up from 31% last week. Last year, 61% of the crop had been harvested, in line with the five-year average. Analysts had predicted 45% to 60% of the crop would be harvested.


In Iowa, 68% of the crop was harvested, compared to 37% last week and the five-year average of 79%. Illinois' harvest was 45% complete, up from 22% last week but below the five-year average of 70%.


The slower-than-expected soybean harvest is "probably not" significant as the upper Midwestern states will likely finish harvest before frost threatens, said Dale Durchholz of Agrivisor. Frost pressure is "fast becoming a non-issue - it really is a non-starter at this juncture," he said.


The USDA said 91% of the soybean crop was dropping leaves, compared to 83% a week ago and the five-year average of 96%. The USDA said 57% of the crop was in good-to-excellent condition, unchanged from last week.


The DTN Meteorlogix weather forecast said showers and light rains will move through the eastern Midwest Wednesday, likely slowing the harvest of crops but the rain does not appear to be heavy enough to cause any significant concerns. Low temperatures may dip into the 30s at times but there still does not appear to be a hard freeze in the forecast during the next 10 days.


Meanwhile, USDA announced Wednesday that private exporters reported the sale of 120,000 metric tonnes of U.S. soybeans for delivery to unknown destinations in the 2008-09 marketing year.


In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled sharply lower Wednesday, tracking weaker crude oil prices and falls in other commodities markets. The new benchmark May 2009 soybean contract settled RMB138 lower at RMB3,167/tonne, or down 4.2%.


Crude palm oil futures on Malaysia's derivatives exchange ended 5.8% lower Wednesday on weak demand in the cash market, lower exports and spillover weakness from soyoil and crude oil. The benchmark December contract on Bursa Malaysia Derivatives ended MYR107 lower at MYR1,743 a metric tonne.

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