January 29, 2007

 

CBOT Soy Outlook on Monday: 1-2 cents lower following overnight losses

 

 

Chicago Board of Trade soybean futures are expected to start Monday's day session on the defensive after weaker overnight trade and in an absence of fresh news, sources said.

 

March soybeans are called to open down 1 to 2 cents per bushel.

 

In e-cbot overnight activity, CBOT March soybeans traded 2 1/4 cents lower at US$7.08 1/4.

 

Prices were capped overnight by that fact that the marketplace is "well supplied with good stocks of soybeans" and by an approaching early harvest in South America, said Don Roose, president of U.S. Commodities.

 

Despite the weaker start, however, soybeans futures should find some support from a cold weather snap in the U.S., an analyst added.

 

"A lot of times, when you get the first blast of cold weather, you do see an increase in feed demand," he said.

 

Also, there are some supportive hints of dryness in South America, where weather has been considered practically ideal so far, Roose noted.

 

Indeed, the DTN Meteorlogix weather firm reported that a drying trend will continue this week in Argentina with some hot weather possible at times and increasing stress expected for crops.

 

In Brazil, soil moisture, showers and temperatures mostly favor crops, although the chance for increasing soybean rust due to wetness still exists, the firm noted.

 

Outside of weather conditions, there were few fresh inputs out to influence prices, CBOT floor sources said.

 

The Commodity Futures Trading Commission reported in its supplemental commitment of traders report that index funds held net long positions totaling 134,047 combined CBOT soybean futures and options contracts as of Jan. 23. Index traders increased longs by 2,612 contracts and cut shorts by 201 contracts, according to the CFTC.

 

Traditional large speculative traders were net long 66,233 contracts, the CFTC said.

 

Index funds were net long combined soyoil futures and options positions to the tune of 69,320 contracts. The index traders increased longs by 2,319 and decreased shorts by 298, according to the CFTC. Speculative funds were reported net long 51,577 soyoil lots.

 

Large speculative traders were reported net long combined futures and options positions in soymeal by 30,731 lots. They lifted longs by 9,536 contracts and decreased shorts by 3,068, the CFTC said.

 

The next upside price objective for soybean bulls is to close prices above solid chart resistance at the contract high of US$7.28 1/2, a technical analyst said. The next downside price objective for the bears is closing prices below solid support at US$7.00.

 

First resistance for January soybeans is seen at Friday's high of US$7.14 and then at US$7.20. First support is seen at last week's low of US$7.08 and then at US$7.06.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly higher Monday on expectations that farmers would grow a smaller crop this year.

 

Farmers are expected to grow less soybeans and more corn this year due to high corn prices, an analyst noted. Good weather conditions in South America, however, have curbed the upward momentum of soybean prices, he added.

 

Crude palm oil futures on the Bursa Malaysia Derivatives, meanwhile, ended mostly flat Monday after yet another uneventful, range-bound trading day as participants continued to bide their time until the next major data release.

 

In other news, India's oilseeds output in the marketing year to September 2007 is forecast at 21.98 million metric tonnes, down from 23.97 million tonnes year a year earlier, according to new data. The estimates are lower on year by 1.99 million tonnes, or 8.3%.

 

India is the world's third largest importer of edible oils after China and the European Union. It buys palm oil from Indonesia and Malaysia and soyoil mainly from Brazil and Argentina.