November 11, 2008


CBOT Soy Outlook on Tuesday: Seen lower on outside market influence



Chicago Board of Trade soybean futures are poised for a lower start to Tuesday's day session, with the influence of outside markets continuing to direct prices, analysts said.


CBOT soybean futures are called 20 to 25 cents lower.


In overnight electronic trading, November soybeans shed 25 1/4 cents to US$9.14 3/4 cents per bushel. January beans dropped 25 1/4 cents to US$9.14 3/4. December soymeal dropped US$5.00 to US$270.30 per short tonne, while December soyoil slipped 121 points to 34.17 cents per pound.


The overnight theme is pointing to the lower start, with lower crude oil, precious metals, equities and strength in the U.S. dollar index directive influences, analysts added.


A quiet news front is expected to keep futures in their recent sideways trading range, with supportive export demand and tight farmer holding expected to limit downside risks.


A technical analyst said prices have been trading sideways for three weeks, which give market bulls slight encouragement that a harvest low may be in place. The next upside price objective for January soybeans is to push and close prices above solid technical resistance at last week's high of US$9.81 3/4 a bushel. The next downside price objective is pushing and closing prices below solid technical support at last week's low of US$8.82 1/2.


First resistance for January soybeans is seen at Monday's high of US$9.54 1/4 and then at US$9.74. First support is seen at US$9.25 and then at Monday's low of US$9.16 1/4.


Meanwhile, the U.S. soybean harvest is 93% complete, even with the average of 93% and 2 percentage points behind the year-earlier period, the USDA said. Analysts had expected harvest to be 93% to 95% complete.


In Iowa, 97% of the soybean crop was harvested, down from 98% last year and the average of 99%. In Illinois, harvest was 95% complete, down from 99% last year and the average of 97%. Harvest was 97% complete in Indiana, behind the 98% in 2007 but ahead of the 95% average.


On the surface, it looks like only farms of more than 10,000 acres have much left to harvest in the Midwest, but Missouri still has a quarter of its soybeans in the field, said Jason Ward, a market analyst at Northstar Commodities.


A total of 70 contracts were delivered against the CBOT November soybean futures contract. Issuers were scattered among various commission houses while the primary stopper was the house account at Term Commodities with 28 lots. The last trade assigned was Friday.


In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Tuesday after the U.S. Department of Agriculture report issued Monday failed to boost sentiment. The benchmark May 2009 soybean contract settled RMB56 lower at RMB3,293 a metric tonne, or down 1.7%.


Crude palm oil futures on Malaysia's derivatives exchange ended 2.4% lower Tuesday on record high inventories and spillover weakness from crude oil and soybean oil, said trade participants. The benchmark January contract on the Bursa Malaysia Derivatives ended MYR40 lower at MYR1,586 a metric tonne.

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