November 12, 2008

 

CBOT Soy Outlook on Wednesday: Down 7-9 cents; overnight theme, outside markets

 

 

Chicago Board of Trade soybean futures are seen starting Wednesday's day session on the defensive, in tune with overnight action in the absence of fresh market directives, analysts said.

 

CBOT soybean futures are called 7 to 9 cents lower.

 

In overnight electronic trading, November soybeans ended 9 1/4 cents lower at US$8.98 3/4 cents per bushel. January beans dropped 8 3/4 cents to US$9.07 1/4. December soymeal dropped US$2.60 to US$266.90 per short tonne, while December soyoil slipped 36 points to 33.37 cents per pound.

 

The influence of outside markets is expected to direct prices once again, with lower crude oil prices, and a steady to firm U.S. dollar applying early pressure, analysts said.

 

A stronger dollar gives foreign countries less buying power to import U.S. commodities.

 

However, solid underlying fundamentals with strong export demand and tight farmer holding of supplies is expected to limit downside pressure and keep prices hovering within its sideways trading range.

 

A choppy tone could unfold, as outside markets are not projecting any aggressive push to the downside, a CBOT floor analyst said.

 

A technical analyst said the next upside price objective for the bean bulls 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 for the bears 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 US$9.25 and then at Tuesday's high of US$9.45 3/4. First support is seen at Tuesday's low of US$8.98 and then at US$8.82 1/2.

 

A total of 424 contracts were delivered against the CBOT November soybean futures contract. Issuers and stoppers were scattered among various commission houses while the house account at Term Commodities stopped 19 lots. The last trade assigned was November 11.

 

In other news, China's grain think tank Wednesday cut its forecast for the country's soybean output this year by 1 million metric tonnes to 16.50 million tonnes. The output cut could be due to a unit yield cut, as the China National Grain and Oils Information Center kept its soybean acreage estimate unchanged.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Wednesday, weighed by Tuesday's losses in its CBOT counterpart. The benchmark May 2009 soybean contract settled RMB29 lower at RMB3,264 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange fell as much as 5.1% Wednesday on selling pressure amid weakness across the commodities spectrum, including crude oil and soyoil, said trade participants. The benchmark January contract on Bursa Malaysia derivatives ended MYR47 lower at MYR1,539 a metric tonne.