May 11, 2009

 

CBOT Soy Outlook on Monday: Down 15-17 cents; broad based market support

 

 

Chicago Board of Trade soybean futures are poised for a lower start Monday, pressured by broad based weakness in commodity and financial markets.

 

CBOT soybeans fell in overnight trade. Nearby May dropped 15 3/4 cents to US$11.18 1/4 a bushel, July is down 16 cents to US$10.95 1/2, and new crop November soybeans were down 14 3/4 cents at US$9.64 3/4.

 

Most commodity markets are weaker in early Monday dealings, with gold and crude oil softer. A firmer dollar and lower stock indexes are lending pressure, also.

 

The combination of weakness in outside markets and weakness from Chinese soy futures overnight on swine flu concerns is seen weighing on prices, said Vic Lespinasse, analyst with Grainsanalyst.com.

 

Soybean futures traded on the Dalian Commodity Exchange settled lower Monday along with a tumble in soymeal prices as the mainland confirmed its first case of swine flu.

 

Meanwhile, traders will likely position themselves ahead of Tuesday's U.S. Department of Agriculture's May supply and demand report. For old-crop soybeans, industry watchers expect USDA to boost its estimate of exports which will cut ending stocks.

 

New-crop traders will look to see what yield USDA uses to help determine production. They expect USDA will use a normal harvested percentage of the March 31 prospective plantings estimate.

 

A technical analyst said first resistance for July soybeans is seen at Friday's high of US$11.18 and then at last week's high of US$11.31. First support is seen at Friday's low of US$10.98 1/2 and then at last week's low of US$10.85.

 

Preliminary open interest for soybeans was up 3,809 contracts to 401,416. For soymeal it was up 3,309 to 149,588 and for soyoil it rose 1,151 contracts to 209,035.

 

DTN Meteorlogix says rainfall throughout the Midwest and Delta will keep farmers sidelined and fields unplanted, especially through the eastern and southern Midwest and Delta regions.

 

Large speculative traders now hold 76,276 net long positions in CBOT soybean futures and options combined contracts as of May 5, compared with net longs of 57,094 in the previous week, according to the Commodity Futures Trading Commission in its supplemental commitment of traders report.

 

Index funds increased their net long positions in CBOT soybean futures and options. The combined number rose to 126,888 contracts from 115,921 the prior week, according to CFTC in its supplemental commitments of traders report released Friday. Commercials held net short combined futures and options positions totaling 178,109 contracts, up from the previous week's 146,999 contracts, as reported in the CFTC supplemental report.

 

On tap for Monday, the U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11 a.m. EDT and its weekly crop progress report at 4 p.m. EDT.

 

In the news, the Chinese government wants to hike its agricultural storage capacity and plans to increase spending in the next two years to expand its state reserves. It wants to have the room to store 15 million tonnes of trains and 1.75 million tonnes of edible oils, among other agricultural goods, the State Council said. The size of the spending wasn't specified.