November 7, 2008

CBOT Soy Outlook on Friday: Tepid but firmer start; outside markets

Soybean complex futures on the Chicago Board of Trade are called to open modestly higher at the start of trading Friday, following gains in overnight electronic trading. Key "outside markets" are mixed in early trading Friday. Crude oil prices are weaker while the U.S. dollar is also weaker against the other major currencies.

In overnight electronic trading, January soybeans last traded up 11 1/2 cents at US$9.17 1/2. December soybean meal was up US$4.30 at US$267.10. December soybean oil futures were up 26 points at 34.43 cents.

Buying interest in the soybean complex is likely to be limited, however, following a dour U.S. jobs report, issued at 8:30 a.m. EST, which showed a larger-than-expected decline of 240,000 jobs during October. The 6.5% unemployment rate was also the highest in 14 years.

"We are due for some short covering after recent losses, but today's jobs report will temper any gains," said a market analyst. "If the stock market or crude oil prices start to falter, then it's likely the grains will follow,"he said.

Traders are also anticipating next Monday's monthly supply and demand report from the U.S. Department of Agricultre. A Dow Jones Newswires survey of 18 analysts found average soybean production estimates at 2.916 billion bushels, below the USDA's current forecast of 2.938 billion bushels. The analysts' average soybean yield was 39.2 bushels per acre, below the USDA's 39.5. Analysts, on average, pegged new crop carryout at 189 million bushels, compared to the USDA's current estimate of 205 million bushels. The USDA is scheduled to release updated estimates Monday at 8:30 a.m. EST.

Technically, soybean bears remain in overall near-term technical command and have gained fresh downside momentum, said a technical analyst. The next upside price objective for the bean bulls is to push and close prices above solid technical resistance at US$9.55 1/2 a bushel. The next downside price objective for the bears is pushing and closing prices below solid technical support at the October low of US$8.38 1/2. First resistance for January soybeans is seen at Thursday's high of US$9.14 and then at US$9.25. First support is seen at Thursday's low of US$8.82 1/2 and then at US$8.65.

Soybean futures on China's Dalian Commodity Exchange settled slightly higher Friday, supported by gains in CBOT electronic trading. China's benchmark May 2009 soybean contract settled RMB15 higher at RMB3,264 per tonne, or up 0.5%.

Brazilian soybean-growing weather is seen as favorable for Parana, but more rain would benefit planting and developing soybeans through northern Mato Grosso. Drier weather would benefit Rio Grande do Sul for field work, according to Meteorlogix weather.