November 28, 2008

 

CBOT Soy Outlook on Friday: Seen slipping slightly on light trade

 

 

Soybean futures on the Chicago Board of Trade are expected to slip as Friday's trading session opens, following single-digit drops overnight, weaker crude oil and a stronger dollar.

 

Crop-supporting rain in Brazil and Argentina also adds to a bearish tone, a CBOT floor trader said.

 

CBOT soybean futures are called 3-4 cents lower.

 

In overnight electronic trading, January soybeans shed 1 1/4 cents to US$8.84 3/4 per bushel. March soybeans lost 3 cents to close at US$8.91. December soymeal dropped US$1.60 to US$261.30 per short tonne and December soyoil slipped 1 point to 32.49 cents per pound.

 

"People will be keeping an eye on the outside markets and the weather down there [in South America]," the trader said. "We'll see who shows up to play."

 

Light trading is expected following the Thanksgiving holiday and the CBOT scheduled an abbreviated session set to close at 1 p.m. EST.

 

Total U.S. export sales of soybeans equaled 785,000 soymeal for the week ended Nov. 20, according to a report issued Friday by the U.S. Department of Agriculture.

 

Analysts expected U.S. soybean export sales to total 500,000-800,000 metric tonnes. Week-earlier sales totaled 790,900 metric tonnes.

 

Soymeal sales totaled 59,700 metric tonnes. Soyoil sales were 17,100 metric tonnes.

 

On Friday's first notice day for the December soymeal and soyoil contracts, 2 lots of soymeal were delivered with the house account of Kottke and the customer account at Fortis each issuing one lot and the customer account at FC Stone stopping 2.

 

Soyoil deliveries were at the light end of analyst expectations at 1,489 lots. The customer account at Newedge issued 432 lots and the customer account at Rosenthal was the primary stopper at 1,097. Analysts expected deliveries of 1,000-4,500.

 

"Look for slow and choppy trade in the U.S. oilseed pits today, with prices once again possibly testing resistance at US$9 basis the lead January soybean contract," noted Farm Futures market analyst Arlan Suderman in his daily outlook.

 

"Soybean prices have largely been bound by an US$8.50 to US$9.50 trading range over the past six weeks, with open interest slowly beginning to creep higher," he said. "A solid move above US$9.50 is needed to confirm a double-bottom in the market, with new lows possible if prices don't quickly move back above US$9."

 

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.

 

"Bears remain in overall near-term technical command," the technician said, noting their next objective is to close January soybeans below solid technical support at last week's low of US$8.35 1/4.

 

He pegged Wednesday's low of US$8.81 1/4 as first support.

 

In global trading news, China's soybean futures traded on the Dalian Commodity Exchange fell Friday, taking cues from shaky crude oil and uncertain global markets, with even Beijing's massive interest-rate cut failing to extend its tepid gains from Thursday.

 

The benchmark May 2009 soybean contract lost 1.4% to settle at 3,226 yuan a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange erased gains in late trading Friday as traders took profits ahead of the weekend, trade participants said.

 

CPO made gains earlier in the day on expectations that Malaysia's palm oil exports could be 12%-13% higher month to month in November on strong demand in the run-up to the winter festival season, they said.

 

The benchmark February contract on Bursa Malaysia derivatives ended 28 ringgit lower at MYR1,632 a metric tonne, down from an intraday high of MYR1,692.

 

In Brazil, "soil moisture is being depleted in the major soybean areas of Rio Grande do Sul and Parana, [with] the driest weather through western Rio Grande do Sul," said DTN Meteorlogix.

 

Conditions in the top soy-producing region of Mato Grosso are "generally favorable", the weather forecaster said.

 

Meanwhile, in Argentina, rainfall is benefiting planting efforts and early crop development, the forecaster added.