April 2, 2007

 

CBOT Soy Outlook on Monday: Down 4-6 cents; carryover selling, corn spillover

 

 

Chicago Board of Trade soybean futures are seen starting Monday's day session lower, continuing the overnight theme on carryover selling and spillover weakness from corn futures.

 

In e-CBOT trade, May was 5 1/4 cents lower at US$7.56 and November soybeans were 5 1/2 cents lower at US$7.99 1/2.

 

CBOT soybean futures are called to start the session 4 to 6 cents per bushel lower.

 

Follow-through selling from Friday amid the bearish influence of an expected limit-down opening in corn futures, and concerns over wet Midwest conditions possibly delaying corn plantings are poised to weigh on prices in early trade, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

However, the market should find strength if corn finds stability, as underlying bullish outlooks, concerns over flooding in Argentina, and supportive demand news from China are seen as underpinning features, Roose added.

 

Otherwise, the market remains at the mercy of corn price movement, as speculative funds liquidate some length amid losses in neighboring corn futures, traders said.

 

A technical analyst said no serious chart damage occurred on Friday's losses, but market bulls have faded a bit. The market would regain technical momentum by producing a close above solid chart resistance at last week's high of US$7.79 basis May futures. The next downside price objective is closing prices below solid support at the March low of US$7.39 1/2.

 

First resistance for May soybeans is seen at 7.66 and then at US$7.70. First support is seen at US$7.55 and then at US$7.50.

 

Meanwhile, China has drafted a plan to purchase US$12.5 billion worth of goods from the U.S. in May, a person familiar with the plan said Monday. The plan includes purchases of US$2 billion of soybeans.

 

The DTN Meteorlogix Weather Service forecast said there is a chance for light rain or drizzle through northern areas of the western Midwest Monday, with the showers changing to snow before ending Monday night or early Tuesday. Dry conditions or with only a few snow showers are on tap late Tuesday, with temperatures averaging near to above normal Monday, near to below normal Tuesday, and below or much below normal Wednesday.

 

In the eastern Midwest, there is a chance for a little light rain or drizzle through the northwestern areas of the region late Monday. There is a chance for showers and some rain Monday evening before changing to snow showers, before ending during Tuesday. Dry conditions are on tap for Wednesday. Temperatures will average above normal Monday, near to above normal Tuesday, and below normal Wednesday, Meteorlogix forecasts.

 

Very heavy rains last week likely caused severe flooding in some locations of Argentina, Meteorlogix reported. The conditions were unfavorable for mature crops and crop harvests, and some harvest losses can not be ruled out, Meteorlogix added.

 

The Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds were reported to hold net long positions totaling 133,129 combined soybean futures and options contracts as of March 27, down from 135,059 the prior week. Traditional large speculative traders were net long 70,163 contracts compared with net longs of 67,926 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 185,507 contracts, down from the previous week's 186,558 contracts.

 

On tap for Monday, the U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11 a.m. EDT (1500 GMT).

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Monday, pressured by Friday's losses in CBOT soybean futures. The benchmark September 2007 contract fell RMB12 to settle at RMB3,225 a metric tonne, after trading between RMB3,189/tonne and RMB3,249/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended mostly lower Monday, dragged down by steep losses in other related commodities such as soyoil. The benchmark June CPO contract settled at MYR2,061 a metric tonne, down MYR9 from Friday after moving between MMYR2,049 and MYR2,065/tonne.