January 7, 2008

 

CBOT Soy Outlook on Monday: Called 1-2 cents lower on position squaring

 

 

Chicago Board of Trade soybean futures are expected to start trading 1-to-2 cents lower Monday as the lack of fresh news is expected to lead to position squaring ahead of Friday's U.S. Department of Agriculture production and stocks data, an analyst said.

 

In overnight e-CBOT trading, March soybeans ended unchanged at US$12.62 1/2 per bushel.

 

There is little fresh news out to influence market in either direction but the "air at these price levels is a little thin," and soybeans could be due for some position squaring ahead of the USDA reports on Friday, an analyst said.

 

In addition, commodity index funds are expected to rebalance their portfolios, trimming their soybean positions and adding other commodities, a commission house analyst said. However, given the current market outlook, fresh commodity fund money is expected to continue to supply support, the commission house analyst said.

 

Improving weather forecasts in Argentina could limit upside interest and choppy trading could result, a trader said.

 

Dry conditions with only a few light showers are expected through Wednesday in Argentina, DTN Meteorlogix Weather said. Scattered showers and thunderstorms with amounts of 0.50-1.50 inches with locally heavier amounts are possible on Thursday. Temperatures are forecast above to much above normal through Wednesday before turning cooler Thursday, Meteorlogix Weather said.

 

On daily technical charts, March soybeans closed lower Friday but near the session high. Market bulls still have the near-term technical advantage with no strong technical clues that a market top is at hand, a technical analyst said. The next upside price objective is for bulls to push prices to US$13.00 per bushel, with the next downside objective to close prices below solid technical support at US$12.18, which would fill last week's upside price gap on the daily bar chart.

 

First resistance for March soybeans is seen at the contract high of US$12.68 1/2 and then at US$12.93. First support is seen at Friday's low of US$12.51 and then at US$12.36.

 

Deliveries posted against the January soybean contract were 451 contracts Monday. Large issuers were the customer account of Bank of America, which issued 155 contracts and Shatkin which issued 173 contracts. The customer account Kottke stopped 181 contracts with the customer account of Iowa Grain stopping 89 contracts.

 

Large speculative traders reduced their long Chicago Board of Trade soybean futures and options on futures positions by 6,994 contracts and trimmed 893 contracts from their short holdings and are now net long 120,503 contracts as of Dec. 31, the Commodity Futures Trading Commission reported Friday in the supplemental commitment of traders report. Large commercial traders decreased their short positions by 5,634 contracts and added 908 contracts to their long positions and are now net short 271,962 contracts the CFTC said. Index funds added 404 contracts to their short positions and cut 184 contracts from their long positions and are net long 184,364 contracts, the CFTC said.

 

In overseas markets, crude palm oil futures settled sharply higher on speculation on a likely cut in India's import duties, trade participants said. The benchmark March contract on the Bursa Malaysia Derivative Exchange ended up MYR68 at an all-time high of MYR3,188/tonne.

 

In other soybean news, soybean futures on China's Dalian Commodities Exchange closed lower on concerns of rising domestic supplies. The March contract fell RMB/59 to RMB 4,738 per metric tonne.