December 31, 2008


CBOT Soy Outlook on Wednesday: Lower on South American rain, dollar strength



Chicago Board of Trade soybean futures are expected to begin Wednesday's day session on the defensive, pressured by improved rain chances in South America crop areas and a strong U.S. dollar.


CBOT soybean futures are called 3 cents to 5 cents lower.


In overnight electronic trading, March soybeans finished 4 3/4 cents lower at US$9.48 1/4. March soymeal was US$2.60 lower at US$294.70 per short tonne, while March soyoil ended 4 points higher at 32.38 cents per pound.


Forecasts for rain to move through Argentina and rain added to southern Brazil forecasts is poised to keep buyers cautious in early trade, analysts said. Overnight strength in the U.S. dollar as well as weakness in crude oil futures are seen aiding the lower tone also.


However, downside pressure is expected to remain curtailed by uncertain crop prospects for South America, good underlying demand and a supportive technical trend, analysts added.


Otherwise, traders anticipate a quiet, thin market as participants attempt to limit risk in the last trading day of the year. Meanwhile, traders are cautious of potential surprises in the U.S. Department of Agriculture's revisions of stocks of grains and oilseeds final estimates for 2003-2008 slated for release at 3 p.m. EST.


A technical analyst said a close below the 20-day moving average crossing at US$8.68 1/4 basis the March contract would temper a near-term friendly outlook. If March extends this month's rally, November's high crossing at US$9.89, then the 25% retracement level of the July-December decline crossing at US$9.97 3/4 are the next upside targets.


The DTN Meteorlogix weather forecast said a few showers will move through Argentina Wednesday and Thursday but the best chance for significant rainfall is in the west and north. Hotter, drier weather returns during the weekend and continues early next week, increasing stress to any reproductive crops.


In Brazil, Wednesday's outlook has shifted the chance of rain southward somewhat. This opens the door for a good rain event for the Rio Grande do Sul area, Meteorlogix said. There is still a chance this rain could miss RGDS but compared to yesterday the chance for rain has improved. Rain is still likely for Parana and Mato Grosso do Sul before the weekend is out.


In deliveries, January soybean deliveries totaled 557 lots. The house account at Term Commodities issued 75 lots, and a customer account at Astro Div of UBS issued 482 lots. Stoppers were scattered among various commission houses. The last trade date assigned was December 8.


January soyoil deliveries totaled 2,998 lots. A customer account at Rosenthal was the primary issuer of 1,577 lots. The house account at Term Commodities stopped 428 lots, and a customer account at Man Professional Clearing stopped 1,358 lots. The last trade date assigned was December 29.


In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled slightly lower Wednesday, as the market was cautious ahead of the New Year holiday. The benchmark May 2009 soybean contract settled RMB8 lower at RMB3,366 a metric tonne.


Crude palm oil futures on Malaysia's derivatives exchange ended Wednesday higher for the fourth successive day, shedding early losses on record high exports, said trade participants. The benchmark March contract on Bursa Malaysia Derivatives ended MYR24 higher at MYR1,695 a metric tonne, a level not seen since Nov. 10.

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