March 5, 2007

 

CBOT Soy Outlook on Monday: 8-10 cents down on e-CBOT, spillover weakness

 

 

Chicago Board of Trade soybean futures are expected to start Monday's day session on the defensive amid follow-through selling from lower overnight trading and spillover weakness from other markets, analysts said.

 

Soybean futures are called to open 8 to 10 cents lower per bushel.

 

In e-cbot trade, May soybeans tumbled 9 cents lower to US$7.44 1/2.

 

Weakness in the neighboring corn market, and in equity, metals and energy markets helped weigh on soybeans overnight, an analyst said. Traders are rattled after heavy declines last week, and spillover pressure from other markets should continue to depress prices during the day session, they said.

 

The technical chart for soybeans also looks bearish, a CBOT floor analyst said. May soybean prices Friday closed near the session low and at a fresh three-week low.

 

"Bears have some fresh downside technical momentum on their side amid a lack of fresh bullish fundamental news," a technical analyst said. "Bulls would regain fresh upside technical momentum by filling on the upside last week's downside price gaps on the daily bar chart. That means pushing prices back to US$7.93 1/2."

 

The next major upside price objective for the soybean bulls is to close May prices above solid resistance at the contract high of US$8.07 1/2. The next downside price objective for the bears is closing prices below solid support at US$7.50.

 

First resistance is seen at Friday's high of US$7.63 and then at US$7.70. First support is seen at US$7.50 and then at US$7.45.

 

News of South America's soy harvest and growing conditions is mostly bearish, a CBOT floor trader noted.

 

DTN Meteorlogix reported there are no significant concerns for the mature crops and harvests in northern Brazil, despite a few isolated thundershowers in the region. Rain in the far south could still favor pod filling soybeans, the weather firm said.

 

Soy yields in Brazil's No. 2 soy producing state, Parana, surprised agronomists this weekend with many farms averaging between 54 and 70 60-kilogram bags per hectare, compared to 40 bags per hectare in 2005-06, according to consulting firm Agroconsult. The firm is currently conducting a national crop tour

 

But Asian soybean rust will likely reduce yields in Brazil's No. 4 soy producing state in 2006-07, Agroconsult agronomists said.

 

In Argentina, meanwhile, recent rainfall will favor filling primary and second crop soybeans, Meteorlogix said.

 

Higher soil moisture in Argentina increased the chances of high yields from this year's crop and helped dispel fears of drought damage in the southern areas of Buenos Aires Province and the northern province of Chaco, the Buenos Aires Cereals Exchange said. The exchange expects record soy production of 45 million tonnes because of a 3% gain in area and a 7.2% increase in yields compared with last year.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Monday, following action on the CBOT.

 

Crude palm oil futures on the Bursa Malaysia Derivatives fell for a third consecutive trading day Monday, as the market remained under pressure from losses in other related commodities, such as soyoil.

 

In other news, deliveries posted against the CBOT March soybeans future totaled 909 contracts. Henning Carey issued 415 contracts. LBS Division stopped 148 contracts, and Dowd Wescott Group stopped 142 contracts. The last trade assigned was March 2.

 

And the Commodity Futures Trading Commission reported index traders cut long and short CBOT soybeans futures and options positions in the week ended Feb. 27. The traders decreased longs by 1,786 position and shorts by 633 positions but were still net long 135,639 positions, according to the CFTC.