April 3, 2006

 

CBOT Soy Outlook on Monday: Steady to down 1 cent, follow-through selling

 

 

Soybean futures on the Chicago Board of Trade are seen starting the week modestly lower, following through from Friday's sharp declines and bearish fundamental outlooks.

 

Analysts expect soybeans to open steady to 1 cent per bushel lower.

 

In overnight electronic trade, May soybeans were 3/4 cent lower at $5.70 3/4, May soymeal was unchanged at $174.60 and May soyoil was 5 points higher at 22.84 cents per pound. The bearish fundamental makeup of the market with big projected U.S. acres and a large crop in South America should generate some follow-through selling from the break on Friday, said JasonRoose, analyst with U.S. Commodities in West Des Moines, Iowa.

 

However, with corn called higher and outside energy and metals markets up Monday, analysts also say downside movement maybe limited, with the potential for prices to move higher on ideas Friday's declines were a bit overdone.

 

Traders will watch the activity of commodity funds, looking for how they react after Friday's declines, particularly with Monday the start of a new month and quarter, said a CBOT commission house broker.

 

Market technicians said May soybean futures dropped to a nearly four-month low and weekly and monthly low close Friday generated fresh downside technical momentum with the next downside objective seen at the November low of $5.59 1/2. A close above chart resistance at last week's high of $5.89 is seen providing fresh upside technical momentum.

 

First resistance for May soybeans is seen at $5.75 and then at $5.80. First support is seen at $5.70 3/4 - Friday's low - and then at $5.65.

 

U.S. Midwest cash soybean basis bids were mixed Monday, cash dealers said. Spot cash soybean bids were down 1 cent in Quincy, Ill., up 5 cents in Sioux City, Iowa, and up 15 cents in Evansville Indiana, they noted.

 

The Commodity Futures Trading Commission said Friday in its commitments of traders report that large speculative traders held net short futures and options positions totaling 33,743 lots in soybeans, net longs of 14,311 in soyoil and a net short position of 10,113 in soymeal as of March 28.

 

On tap for Monday, the U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 10:00 a.m. CDT (1500 GMT).

 

DTN Meteorlogix Weather Service said showers and thundershowers with precipitation measured between 0.30-1.50 inch and locally heavier was reported across the Midwest during the weekend. In the western U.S. Midwest, showers may linger early Monday, before turning mostly dry Tuesday, with a chance for showers or a little light rain during Wednesday. In the eastern Midwest, light rain or showers may linger over the northern and eastern Midwest today, with mainly dry conditions elsewhere in the region today and Tuesday.

 

In Brazil, scattered showers and thundershowers in northern Mato Grosso may lead to harvest delays. No significant concerns for the harvest elsewhere in the region. Soil moisture should favor any late filling soybeans, Meteorlogix said.

 

Rotterdam soybeans and soymeal prices were lower, and European vegoils were mixed. In overseas markets, soybean futures on China's Dalian Commodity Exchange settled lower Monday, in line with Friday's losses in soybean futures on the Chicago Board of Trade. The benchmark September 2006 soybean contract fell RMB44 to settle at RMB2,657 a metric tonne, after trading between RMB2,650 and RMB2,667/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply lower Monday as the market succumbed to persistent concerns about sluggish consumer demand and rising supply. A strengthening Malaysian ringgit and a breach of key technical support levels further exacerbated downward pressure on the market, traders said. The benchmark June CPO contract ended at MYR1,421 a metric tonne, down MYR16 from Friday.