November 25, 2008
CBOT Soy Outlook on Tuesday: Profit-taking pressure expected
Soybean futures on the Chicago Board of Trade are expected to slip during Tuesday's opening trades, in line with overnight losses and pressure from profit-taking.
CBOT soybean futures are called 8-10 cents lower.
In overnight electronic trading, January soybeans shed 7 cents to US$8.77 per bushel. The March contract dropped 7 cents to US$8.84 3/4. Crude oil also slipped overnight.
December soymeal lost 40 cents to US$257.30 per short tonne, while December soyoil fell 43 points at 32.31 cents per pound.
Monday's rally "may be nothing more than a short-covering bounce in a holiday-shortened week with nothing of substance changing between today and Friday," said market analyst Joel Karlin in his Western Milling Weekly newsletter.
U.S. soybean crush for October is expected to be 151.1 million bushels in the U.S. Census Bureau's monthly report, up from the September crush figure of 125.7 million bushels.
The Census Bureau's crush report is scheduled for release Wednesday at 8 a.m. EST.
"With the Chinese government rather strangely supporting domestic soybean prices at levels above the world market, there is incentive on the part of Chinese crushers to look to foreign markets for supplies," wrote Dennis Gartman in his daily The Gartman Letter.
"This is especially true in light of the collapse of freight rates in recent weeks, making it far less expensive to bring supplies into China from abroad than existed only a few short weeks ago."
The U.S. inspected 36.276 million bushels of soybeans for export in the week ended Nov. 20, according to a U.S. Department of Agriculture report released Monday.
Analysts surveyed by Dow Jones Newswires expected inspections of 35-40 million bushels.
Market bulls are aiming to pierce the technical resistance point at last week's high of US$9.21 1/4 a bushel, a market technician said, marking first resistance at US$9.
Short covering and bargain-hunting buying were featured in Monday's rally, supported by bullish outside markets, including stronger equities and crude oil and marked losses in the U.S. dollar, the technician said. But, he added, "bears remain in overall near-term technical command."
Soybean bears aim to close January soybeans below solid technical resistance at last week's low of US$8.35 1/4, he said, pegging US$8.72 3/4 as first support.
"The bean chart looks a lot more like a break out of the trading range and down-trending resistance than does the corn or wheat, which...look more like they've hit the top of their sideways trading range versus a true [technical] break out," noted analyst Mike Zuzolo in a market commentary.
In global trading news, soybean futures traded on China's Dalian Commodity Exchange settled higher Tuesday, with the soy complex riding the momentum of a rebound led by crude oil and equity markets. The benchmark May 2009 soybean contract gained 0.9% to settle at 3,291 Chinese yuan (US$483.77) a metric tonne.
Crude palm oil futures on Malaysia's derivatives exchange rose 4.2% Tuesday - ending above 1,500 Malaysian ringgit (US$414) a metric tonne for the first time in almost two weeks - as investors covered shorts, taking their lead from higher exports and an overnight rebound in crude oil and soyoil prices. The benchmark February contract on Bursa Malaysia Derivatives ended MYR32 higher at MYR1,520/tonne after trading above MYR1,500 throughout the day.
Generally favorable weather conditions for planting and developing soybeans are seen across Brazil's major production areas, but it is becoming too dry across Rio Grande do Sul, DTN said.
Meanwhile, in Argentina, "crop stress is increasing" due to inadequate moisture, the forecasters add.
After strikes last spring limited sales, Argentina's farmers are sitting on extremely high soybean stocks. About 10 million metric tonnes of soybeans are resting in silos and in plastic bags across the farm belt, up from the 3 million tonnes usually remaining at this time of the year, said Rosario Grain Exchange economist Lorena D'Angelo. This year's stocks represent 22% of the record crop grown in 2007-08.