October 31, 2008


CBOT Soy Outlook on Friday: Outside markets squeeze, likely profit grabs



Soybean futures on the Chicago Board of Trade are expected to slip Friday, under pressure from dipping equities, dropping crude oil and a weakening U.S. dollar.


CBOT soybean futures are called 10-15 cents lower.


In overnight electronic trading, November soybeans shed 13 3/4 cents to US$9.20 1/4 cents per bushel. January soybeans lost 14 1/2 cents to US$9.28 1/2. December soymeal fell US$5.10 to US$278.20 per short tonne, while December soyoil subtracted 85 points at 33.63 cents per pound.


The lower outsides, along with Friday profit-taking and supportive harvest weather "should start things lower this morning," a CBOT floor trader said.


Soy and grain markets are holding gains for the week and, if they hold through Friday's trade will be the first weekly gains in four weeks, noted Benson Quinn analyst Kim Rugel in her daily soybean review.


"Look for profit taking to develop," she added.


A total of 641 contracts were delivered against the November soybean futures contract on first notice day. Traders and analysts generally expected about 500, but estimates ranged from 0-1,000.


Customer accounts at UBS Astro Division and JPMorgan issued 400 and 241 lots, respectively. The primary stopper was a customer account at MF Global at 328 lots. The last trade date available was Oct. 9, 2008.


Soybean bears aim to close January soybeans below the US$9 psychological support level, a market technician said, pegging first support at Thursday's low of US$9.27 1/4.


"Bears remain in near-term technical command," the analyst said. "However, a bullish weekly high close on Friday would provide the bulls with fresh upside near-term technical momentum and would also be an early bullish technical clue that a harvest low is in place.


The bulls must close above major psychological resistance at US$10 a bushel, he said, marking first resistance at Thursday's high of US$9.74.


Warm harvest weather is expected across the U.S. Midwest through Tuesday, with temperatures ranging from 35-73 degrees Fahrenheit, according to DTN Meteorlogix.


The Midwest can expect mostly dry weather with a few light showers in the northwest Tuesday, the private forecasting firm said.


In Brazil, some rain is aiding the environment for planting and developing soybeans through northern Mato Grosso, while weather is "generally favorable" through Parana and drier weather is expected to benefit fieldwork in Rio Grande do Sul," DTN said.


Meanwhile, in Argentina, "beneficial rains" should improve soil moisture conditions for crop planting, the forecasters add.


In global trading news, soybean futures traded on the Dalian Commodity Exchange settled lower Friday, tracking CBOT losses.


The benchmark May 2009 soybean contract settled RMB56 lower at RMB3,324 a metric tonne.


Crude palm oil futures on Malaysia's derivatives exchange ended 2.9% lower Friday on profit-taking, spillover weakness from soyoil and a bearish price outlook, said trade participants.


Still, a turnaround in Malaysia's palm oil exports, which were estimated 5%-10% higher on month in October by cargo surveyors, limited losses.


The benchmark January contract on Bursa Malaysia Derivatives ended MYR45 lower at MYR1,515 a metric tonne, off the intraday high of MYR1,539.

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