October 22, 2008

CBOT Soy Outlook on Wednesday: Seen lower; economic woes pressure



Soybean futures on the Chicago Board of Trade are poised to retreat in early action, as global economic turmoil is sending bearish signals across broader commodity and equity markets, analysts said.


CBOT soybean futures are called 15-to-20 cents lower.


In overnight electronic trading, November soybeans were 17 3/4 cents lower at US$8.90 1/4, January soybeans were 20 1/4 cents lower US$8.95. December soyoil was 81 points lower at 34.99 cents per pound and December soymeal was US$7.30 lower at US$258.50 per short tonne.


Strength in the U.S. dollar, weakness in energies and precious metals and declines in the stock market are seen as the catalyst to keep buyers sidelined, with bearish momentum expected to attract technical selling as well, analysts added.


Supportive underlying fundamentals with uncertainty surrounding yields and solid demand are expected to provide some support, but will continue to take a backseat to outside market influences as money flow remains the dominant feature.


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 psychological support at US$9.00.


First resistance for November soybeans is seen at US$9.25 and then at US$9.40. First support is seen at US$9.00 and then at US$8.85.


The DTN Meteorlogix weather forecast said rain and cool weather will likely delay/disrupt crop harvests through western areas of the U.S. Midwest during the next few days. Eastern areas could still do some work Wednesday and early Thursday before the rain arrives in the west and spreads east.


In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled sharply lower Wednesday, with the tumble in crude oil futures pushing soybean and soy products to limit-down late in the session. The benchmark May 2009 soybean contract settled RMB101, or 3.0%, lower at RMB3,260 a metric tonne.


Crude palm oil futures on Malaysia's derivatives exchange ended Wednesday at their lowest level so far this year, pressured by weak soyoil and crude oil prices, said trade participants. The benchmark January contract on the Bursa Malaysia Derivatives ended down MYR87 at MYR1,565 a metric tonne.