October 24, 2008


CBOT Soy Outlook on Friday: Down sharply on bearish financial markets



Chicago Board of Trade soybean futures are expected to open sharply lower Friday, following overnight losses caused by a tumble in the financial markets.


Soybeans are called 30 to 35 cents lower. In overnight trading, November soybeans were down 33 1/4 cents to US$8.51 1/4 and January soybeans were down 34 1/4 cents to US$8.54 1/4.


December soyoil was down 175 points to 31.07 cents per pound and December soymeal was down US$6.30 to US$262.70 per short tonne.


Although the market has shown some signs of fundamental support, and soybeans were "starting to get a little bit of a bid in there" overnight, a trader said. But any momentum was killed when bearish movement in the financial markets, the dollar and crude oil erased the initial overnight rally.


U.S. stock futures dropped by their limit overnight, and sharp losses are expected Friday, pressuring commodities.


There is some supportive news for soybeans lost amid the "bearish chaos," traders said. Basis is strong, and wet, cold weather continues to hinder farmers' harvest efforts, supporting the market.


A trader said there were reports of pods shattering in northwest parts of the soybean belt.


"Granted it might be relatively isolated, but it was something that was getting some press yesterday," a trader said. He added that yield reports have generally been above expectations for corn but below expectations for soybeans.


Analysts also note strong export sales. Year-to-date commitments already total 45% of the USDA forecast for the 2008-09 marketing year.


"As we are only six weeks into the marketing year, USDA may need to revise export demand upward in future balance sheets," Kim Rugel, analyst with Benson Quinn Commodities, wrote in a market commentary.


In other export news, private exporters reported to the U.S. Department of Agriculture export sales of 110,000 metric tonnes of soybeans for delivery to China during the 2008-2009 marketing year, the USDA said Friday.


In other markets, crude palm oil futures on Malaysia's derivatives exchange fell by as much as 12.4% to a three-year low Friday on rising inventories, sluggish exports and falling crude oil prices, said trade participants.