March 10, 2008

 

CBOT Soy Outlook on Monday: Lower, corrective sell-off continues

 

 

Chicago Board of Trade soybean futures are seen starting Monday's day session on the defensive, as the market extends its corrective sell-off from record highs.

 

CBOT soybean futures are called to start the session 50 cents lower.

 

In overnight electronic trading, May soybeans were 50 cents lower at US$13.58 3/4, July soybeans were 50 cents lower at US$13.71. May soyoil was 200 points lower at 61.33 cents per pound and May soymeal was US$7.10 lower at US$343.20 per short tonne.

 

Speculative long liquidation is expected to take center stage once again, as the market continues its correction from previous highs, analysts said.

 

Soyoil futures are the downside leader of the complex once again, with a limit down move overnight helping soybeans grind out limit declines as well, analysts added.

 

Broad based selling across commodities in overnight trade is pointing to lower price movement as well, with technical selling and weakness in Asian markets keeping buyers on the run, a CBOT floor analyst said.

 

However, the ability of Malaysian palm oil futures to trim their losses overnight and light position squaring ahead of Tuesday's supply and demand support may lend support to attract some buying on the lower opening, analysts added.

 

A technical analyst said serious near-term chart damage has been inflicted on the recent price break, with market bulls fading badly and bears gaining fresh downside technical momentum. Bulls need to show solid power quickly or the bullish dominos could start to fall quickly, he added.

 

The next upside price objective for July soybeans is to push prices above psychological resistance at US$14.00 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$13.00. First resistance for July soybeans is seen at US$13.75 and then at US$14.00. First support is seen at US$13.50 and then at US$13.25.

 

Index funds lowered their net long CBOT soybean futures and options positions combined, which now totals 195,809 contracts as of March 4, down from 197,820 the prior week, according to Commodity Futures Trading Commission, as reported Friday in its supplemental commitment of traders report. Traditional large speculative traders were net long 95,466 contracts compared with net longs of 111,610 in the previous week. Commercials held net short combined futures and options positions totaling 261,337 contracts, down from the previous week's 279,300 contracts.

 

On tap for Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11:00 a.m. EST.

 

In deliveries, March soybean deliveries totaled 987 lots. Customer accounts at Man Professional Clearing issued and stopped 510 and 503 lots respectively. The last trade date assigned was March 7.

 

March soymeal deliveries totaled 379 lots. A customer account at Man Professional Clearing issued 379 lots. The last trade date assigned was March 6.

 

March soyoil deliveries totaled 1,607 lots. Customer accounts at Man Professional Clearing issued and stopped 652 and 400 lots respectively. The last trade date assigned was March 7.

 

In overseas markets, soy futures traded on the Dalian Commodity Exchange mostly closed at 4% limit-down Monday, with the complex weighed down by a speculative sell-off in soyoil futures on the back of a tumble in CBOT soy futures Friday and market talk of government intervention. The benchmark January 2009 soybean contract fell RMB172 to settle at RMB4,462 a metric tonne, while the benchmark September soyoil contract settled RMB508 lower at RMB12,212/tonne.

 

Meanwhile, China imported 2.02 million metric tonnes of soybeans in February, according to preliminary data issued by the General Administration of Customs Monday. This is up 71% from the 1.18 million tonnes in the same period last year, based on previous customs data.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Monday, taking their cue from limit-down soyoil prices. Speculation over China releasing vegetable oil from its reserves for domestic sale added to the losses, but mostly recovered on strong export data from cargo surveyors. The benchmark May contract on Bursa Malaysia Derivatives ended MYR45 lower at MYR3,665/tonne, off an intraday low of MYR3,500.