April 30, 2007

 

CBOT Soy Outlook on Monday: Down 2-3 cents; following corn, wheat futures

 

 

Chicago Board of Trade soybean futures are seen starting Monday's day session lower, in tune with overnight trade, with price pressure from corn and wheat providing some defensive influences.

 

In e-CBOT trade, May was 2 1/2 cents lower at US$7.20 1/2, July was 2 1/2 cents lower at US$7.36, and November soybeans were 2 1/2 cents lower at US$7.64.

 

CBOT soybean futures are called to start the session 2 to 3 cents lower.

 

The market is poised to follow corn and wheat lower, as it is pretty hard for soybeans to find aggressive buyers when corn and wheat are projected with double digit losses, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

However, downside pressure is expected to remain limited amid favorable weather conditions that should promote an aggressive corn planting pace this week and potentially limit the shifting of acres from corn to soybeans, Roose added.

 

Meanwhile, technical strength from ideas the market has put in a near term low is expected to provide some underlying strength as well, traders said.

 

A technical analyst said market bulls are gaining some confidence that a near-term market low might be in place. But at present, a two-month-old downtrend line is still in place on the daily bar chart for July futures. Soybean bulls would regain some better upside technical momentum by producing a close above solid chart resistance at US$7.50. The next downside price objective for the bears is closing prices below solid support at last week's low of US$7.25 1/2.

 

First resistance for July soybeans is seen at Friday's high of US$7.42 and then at US$7.50. First support is seen at Friday's low of US$7.28 and then at US$7.25 1/2.

 

Deliveries posted against May soybean futures were 1,258 contracts Monday. Large issuers included the house account of Term Commodities, which issued 508 contracts, and the customer account at the Astro Division of UBS Securities with 489 lots. Stoppers were scattered among various commission houses. The last trade assigned was April 25.

 

The DTN Meteorlogix Weather Service forecast said planting conditions should improve in the western Midwest this week after recent hot temperatures and since mainly dry weather should last through at least Saturday. After that it may get wet again. In the eastern Midwest, there should be improving conditions for field work and planting this week, despite a few light showers in the area.

 

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 135,202 combined soybean futures and options contracts as of April 24, down from 135,860 the prior week. Traditional large speculative traders were net long 32,825 contracts compared with net longs of 47,990 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 137,353 contracts, down from the previous week's 155,099 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) and weekly crop progress reports at 4:00 p.m. EDT.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly lower Monday, with market participants concerned over possible big moves in CBOT futures during China's long holiday. The benchmark September 2007 contract settled RMB3 higher at RMB3,118 a metric tonne. Chinese markets will be closed May 1-7 for the Labor Day holiday.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Monday as gains in soyoil futures and optimism about the long-term demand outlook for edible oils lent support to the market. The benchmark July contract ended up MYR9 at MYR2,214 a metric tonne.