May 8, 2006

 

CBOT Soy Outlook on Monday: Seen down 3-5 cents; following e-CBOT theme

 

Soybean futures on the Chicago Board of Trade are seen starting Monday's open auction session on the defensive, taking its cue from overnight action amid the absence of fresh supportive drivers.

 

Analysts expect soybeans to open 3 to 5 cents per bushel lower.

 

In overnight electronic trade, July soybeans were 4 1/2 cents lower at $6.02, July soymeal was $0.90 lower at $177.70 and July soyoil was 19 points lower at 25.34 cents per pound.

 

The market is set to follow the overnight theme, with follow through selling from Friday's poor technical close, weakness in outside inflationary markets and favorable weather conditions for spring plantings and early germination weighing on prices, said a CBOT commission house broker.

 

The absence of aggressive fund short covering follow recent declines in large speculative shorts and ideas that previous gains are a bit overdone in the face of bearish fundamentals heading toward Friday's supply and demand report from the U.S. Department of Agriculture is seen taking some edge off prices as well, traders add.

 

Nevertheless, traders say the market remains on guard for potential fund buying, particularly with the volatile moves seen in outside markets last week.

 

Technical analysts said it will take a close above solid resistance at Friday's high of $6.14 1/2 to provide fresh upside technical momentum. A close below the last-April upside gap on the daily chart - meaning below $5.91 - would provide fresh downside technical momentum.

 

First resistance for July soybeans is seen at $6.10 and then at $6.14 1/2. First support is seen at $6.05 - Friday's low - and then at $5.98 - the top of the aforementioned upside price gap.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Monday, cash dealers said. Spot cash soybean bids were down 2 cents in Peoria, Ill., up 1 cent in St. Louis, Mo, and down 5 cents in Sioux City, Iowa, according to cash sources Monday.

 

The DTN Meteorlogix Weather Service forecast said light to moderate showers of 0.25-0.75 inch will tend to favor the southern and eastern areas of the western Midwest into Monday night. Drier conditions are on tap for Tuesday and Wednesday.

 

In the eastern Midwest, mainly dry conditions are expected Monday. Scattered showers and thundershowers of 0.25-1.00 inch and locally heavier are on tap for Tuesday into Wednesday. Temperatures will average near to above normal Monday and Tuesday and near to below normal during Wednesday.

 

On tap for Monday, USDA is scheduled to release its weekly export inspections report 10:00 CDT and its weekly crop progress report 1500 CDT. Traders anticipate soybean plantings in the 20% to 27% complete range Monday.

 

In deliveries, a total of 1,302 delivery notices were posted against the CBOT May soybean contract. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was May 5. A total of 672 delivery notices were posted against May soyoil. The house account at Term Commodities stopped 162 lots. The last trade date assigned was May 5.

 

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 8,784 lots in soybeans as of May 2, down from the previous week's 37,123 net shorts. In soyoil large specs held net long positions of 62,755 compared to 38,528 lots in the previous week. Large specs held net short positions of 12,251 in soymeal, down from net shorts of 18,582 lots reported in the previous week.

 

Rotterdam soybeans and soymeal prices were mostly higher, and European vegoils were mixed.

 

In overseas markets, soybean futures on China's Dalian Commodity Exchange settled mostly higher in the first trading day after the week-long holiday, tracking gains in CBOT soybean futures last week when the local market was closed, traders said. The benchmark September 2006 soybean contract settled up RMB21 from Friday April 28, the last trading day before the holiday, at RMB2,643 a metric tonne, after trading between RMB2,631/tonne and RMB2,657/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended mixed Monday in subdued trading, as most participants remained on the sidelines ahead of the release of important supply and demand data Wednesday.

 

The benchmark July CPO contract ended at MYR1,457 a metric tonne, up MYR4 from Friday after moving between MYR1,453 and MYR1,462/tonne.