March 1, 2010

 

CBOT Soy Outlook on Monday: Down 4-6 cents on dollar, South American harvest

 

 

Chicago Board of Trade soybeans are expected to open weaker Monday following overnight losses on a stronger dollar.

 

Soybeans are called 4 to 6 cents lower. In overnight trade, March soybeans were down 6 cents to US$9.45 per bushel while May soybeans were down 5 1/4 cents to US$9.55 3/4.

 

May soymeal was down US$3.40 to US$266.60 per short tonne and May soyoil was down 6 points to 39.64 cents per pound.

 

Follow-through buying after Friday's gains "fell apart" in the overnight session, said Bryce Knorr, Farm Futures senior editor.

 

"Outside markets appeared to again influence prices, with a sharply higher dollar discouraging traders from taking risk," he said in a morning commentary.

 

Don Roose, president for U.S. Commodities in West Des Moines, Iowa, said there are other factors pressuring the market as well, including ideas that farmers might end up planting less corn acres than initially thought, which would mean more soybean acres. A large snowpack and prospects of soggy soils this spring might deter would-be corn plantings, analysts say.

 

Roose added that there is harvest pressure from South America, and that with China's needs mostly booked into April, its next purchases are more likely to be from South America. Analysts are expecting a very large South American crop.

 

The next downside price objective for the bears is pushing and closing May prices below solid technical support at US$9.41, a technical analyst said. The next upside technical objective for the bulls is pushing and closing May prices above solid technical resistance at last week's high of US$9.85.

 

First resistance for May soybeans is seen at Friday's high of US$9.64 and then at US$9.70, the technical analyst said. First support is seen at US$9.50 and then at Friday's low of US$9.46 3/4.

 

Managed money accounts shed short positions in CBOT soybeans in the week ended Feb. 23, the Commodity Futures Trading Commission said. The disaggregated commitments of traders report showed that managed money cut 9,287 contracts from their short positions, leaving them with 37,503, while cutting 3,174 long positions, for a total of 72,444.

 

The CFTC's supplemental commitments of traders report, meanwhile, showed that traditional speculative funds cut 8,671 contracts from their short positions and 2,254 contracts from their long positions, leaving them net short almost 12,000 contracts.

The report showed that soybean prices have recently been underpinned by short-covering, Roose said.