October 17, 2008


CBOT Soy Outlook on Friday: Higher; overnight strength, equities eyed



Soybean futures on the Chicago Board of Trade are seen starting Friday's day session higher, taking its cue from overnight action, but traders will eye outside markets for direction, analysts said.


CBOT soybean futures are called 10-to-13 cents higher.


In overnight electronic trading, November soybeans were 13 cents higher at US$8.88. December soyoil was 10 points lower at 35.35 cents per pound and December soymeal was US$2.60 higher at US$254.60 per short tonne.


The market is poised to follow through on overnight gains, but the firmer calls are very tentative, as the direction that outside financial markets take at the opening bell will remain a dominant influence on market psychology, analysts said.


Stock index futures are pointing lower in early action, but crude oil is posting gains.


Meanwhile, higher-than-expected weekly export sales across the entire soy complex should aide early strength, with talk of tight farmer holding of supplies and oversold conditions, attractive features for buyers, analysts added.


However, lingering worries over the state of global economies remain hindrances to any rallies beyond short covering bounces, a CBOT floor broker said.


A market technician said 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 US$8.50 and then at Thursday's low of US$8.25.


U.S. Department of Agriculture reported total weekly soybean export sales were a net 1,028,000 metric tonnes for the week ended Oct. 9. Analysts had forecast sales between 500,000 and 800,000 metric tonnes. The primary buyers were unknown destinations with 421,500 metric tonnes and China with 189,400 tonnes.


Soymeal sales were a net 245,500 tonnes, above trade estimates ranging from 100,000 to 150,000 tonnes. Soyoil commitments were a net 16,100 metric tonnes. Analysts had forecast sales between zero and 15,000 tonnes.


The DTN Meteorlogix weather forecast said rains return to the western Midwest early next week, again leading to harvest delays and disruptions. The eastern Midwest stays drier a day or two longer and could get some work done prior to the rains.


In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled up sharply Friday, with most contracts hitting daily upper limits late session on short-covering, but analysts said the rebound is likely to be very limited. The benchmark May 2009 soybean contract settled RMB118, or 3.9%, higher at RMB3,177/tonne.


Cash soybean prices in China's major producing regions stayed on a downward trend in the week ended Friday under the weight of hefty losses in CBOT soy futures and freight rates, while buyers stood on the sidelines, traders and analysts said.


Crude palm oil futures on Malaysia's derivatives exchange ended lower for a third successive day Friday, erasing all intraday gains on concerns over a likely fall in exports and a bearish medium-term outlook. The benchmark January contract on the Bursa Malaysia Derivatives ended MYR16 lower at MYR1,635 a metric tonne.

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