November 21, 2008


CBOT Soy Outlook on Friday: Mixed; outsides to offset overnight theme



Traders are looking for a mixed start to Friday's day session opening for Chicago Board of Trade soybean futures.


CBOT soybean futures are called 3 cents higher to 3 cents lower.


In overnight electronic trading, January soybeans ended 2 cents lower at US$8.54. January soymeal were US$1.00 lower at US$257.50 per short tonne, while December soyoil ended 7 points higher at 31.07 cents per pound.


The overnight session was under pressure from carryover selling from Thursday's late collapse, but the outside macro markets are positive in early action and that provides price support, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.


The direction of the market is dependent on outside markets and a higher tone in those markets will trigger some short covering after recent declines, Roose added.


The U.S. dollar is higher, and crude oil and stock index futures are higher in early market action.


A quiet news front will keep traders eyeing the outsides, but underlying demand and lingering dryness in Argentina and southern Brazil will provide support to promote strength above prior lows, analysts added.


A technical analyst said the next upside price objective for January soybeans is to push and close prices above psychological resistance at US$9.00 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 US$8.75 and then at Thursday's high of US$8.91. First support is seen at Thursday's low of US$8.54 1/2 and then at US$8.38 1/2.


The DTN Meteorlogix weather forecast said Friday's outlook for next week continues to mention some promise of showers in Argentina but compared to yesterday this chance has diminished.


In Brazil, the drier period is expected to continue during at least the next 5 to 7 days, especially from Mato Grosso Do Sul southward.


In other news, a group of Philippine buyers has signed contracts to buy 78,450 metric tonnes of soybean meal and 74,650 tonnes of feed wheat, traders said Friday.


In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Friday, with earlier losses pared in the afternoon following equities-led market speculation that Beijing may cut interest rates. The benchmark May 2009 soybean contract was 2.2% lower to RMB3,217 a metric tonne.


Cash soybean prices in China's major producing areas were lower in the week to Friday, under pressure from cheaper imports and a broader loss of confidence on sliding U.S. markets.


Crude palm oil futures on Malaysia's derivatives exchange fell as much as 5.6% Friday on concerns over the global economic recession and slumping crude oil prices, but ended off lows on short covering. The benchmark February contract on the Bursa Malaysia Derivatives ended MYR8 lower at MYR1,460 a metric tonne.

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