November 18, 2008

 

CBOT Soy Outlook on Tuesday: Down 4-8 cents; following overnight theme

 

 

Soybean futures on the Chicago Board of Trade are expected to start Tuesday's day session lower, continuing the overnight theme in the absence of fresh directive news.

 

CBOT soybean futures are called 4 cents to 8 cents lower.

 

In overnight electronic trading, January soybeans dropped 9 1/2 cents to US$8.97. January soymeal were US$2.80 lower at US$270.00 per short tonne, while December soyoil shed 34 points to 32.36 cents per pound.

 

A quiet news front and mixed signals from outside markets are expected to generate cautious activity, with two sided action possible as traders begin to square positions ahead of next week's holiday, a CBOT floor analyst said.

 

However, bullish traders are expressing optimism that the market's reluctance to break in the face of outside weakness is a supportive sign of a possible near term bottom being in place as well as slowly divorcing itself from that outside market factors, analysts added.

 

Dryness issues in Argentina and tight farmer holding of supplies is supportive, but demand uncertainty in recessionary times continues to promote hesitancy among bullish traders.

 

A technical analyst said 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$9.54 1/4 a bushel. The next downside price objective 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 Monday's high of US$9.17 3/4 and then at US$9.25. First support is seen at US$9.00 and then at Monday's low of US$8.85.

 

The U.S. soybean harvest is 95% complete, compared to 98% last year and the average of 96%, the U.S. Department of Agriculture said. Analysts had expected harvest to be 96% to 97% complete.

 

In Iowa, 98% of the soybean crop was harvested, compared to 99% last year and the average of 100%. In Illinois, harvest was 100% complete, same as last year and up from the average of 99%. Harvest was 98% complete in Indiana, compared to 100% last year and the average of 99%.

 

Most states are near or ahead of schedule. An exception is Missouri, where 83% of the crop is harvested, compared to 96% last year and the average of 92%.

 

The DTN Meteorlogix weather forecast said the trend towards below normal rain and above normal temperatures continues for Argentina. The conditions are increasing stress to early planted summer crops.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled unchanged Tuesday, with thin trading volume as participants remained cautious amid the ongoing financial crisis. The benchmark May 2009 soybean contract settled unchanged at RMB3,231/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended little changed Tuesday, snapping a five-day losing streak, but the prospects of a further fall in crude oil prices are still looming over the vegetable oil markets. The benchmark third-month February contract on the Bursa Malaysia Derivatives ended MYR1 higher at MYR1,436 a metric tonne.