October 16, 2008

 

CBOT Soy Outlook on Thursday: Lower; follows overnight, outside markets key

 

 

Soybean futures on the Chicago Board of Trade are expected to drift lower to start Thursday's day session, in line with overnight action, but movements in outside markets will once again dominate price direction.

 

CBOT soybean futures are called 7-to-10 cents lower.

 

In overnight electronic trading, November soybeans were 9 cents lower at US$8.49. December soyoil was 55 points lower at 34.98 cents per pound and December soymeal was US$2.20 higher at US$242.30 per short tonne.

 

Weakness in outside markets weighed on futures overnight, with sharp declines in Asian soy and palm oil futures aiding the losses, analysts said.

 

However, the direction of crude oil and equity markets is key to the opening of prices, particularly with energies trimming overnight lows and stock index futures trending higher in early action, traders said. The U.S. dollar index is lower.

 

A quiet news front is keeping attention on the financial sector, as worries of a global recession is reducing demand, and harvest pressure continues to limit bullish optimism in the marketplace.

 

A market analyst said there are no early technical clues of a market bottom being close at hand, but seasonal studies do suggest a market bottom around this timeframe. The next upside price objective for November soybeans is to push and close prices above major psychological resistance at US$9.00 a bushel. The next downside price objective is pushing and closing prices below major psychological support at US$8.00.

 

First resistance for November soybeans is seen at US$8.81 1/2 and then at US$9.00. First support is seen at Wednesday's low of US$8.46 1/2 and then at US$8.25.

 

The DTN Meteorlogix weather forecast said wet conditions across the central and eastern Midwest Thursday will delay harvests. A turn to wet, cool, conditions next week may also be unfavorable for maturing crops and for the harvest. Thursday's frost and freeze over the northern part of the western Midwest is not of much concern, Meteorlogix added.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled sharply lower Thursday, but analysts said a technical rebound is due. The new benchmark May 2009 soybean contract settled RMB108, or 3.4%, lower at RMB3,059/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange fell as much as 8.9% Thursday, breaking below MYR1,600 a metric tonne for the first time in two years on weak demand in the cash market and a slump in both soyoil and crude oil. The new benchmark January contract on the Bursa Malaysia Derivatives ended MYR97 lower at MYR1,651/tonne.