May 15, 2006

 

CBOT Soy Outlook on Monday: Down 4-6 cents on fundamentals, outside markets

 

 

Soybean futures on the Chicago Board of Trade are seen starting Monday's open auction session on weak footing, pressured by the combination of bearish fundamentals and sharp declines in outside inflationary markets.

 

Soybeans are called to open 4 to 6 cents lower.

 

The outside markets set the tone for the declines overnight, and traders anticipate follow-through selling will be the feature on the opening, said a CBOT commission house broker.

 

In overnight electronic trade, July soybeans were 5 cents lower at US$6.08, July soymeal was US$0.90 lower at US$176.90 and July soyoil was 29 points lower at 25.90 cents per pound.

 

The fundamentals of the market are poised to loom over prices, as burdensome ending supply forecasts from Friday's U.S. Department of Agriculture supply and demand reports apply pressure to prices. However, analysts say based on early planting progress soybeans are poised to lose some acreage to corn, which raise the question of if Friday's USDA new crop projections will be the highest carryout forecasts of the season.

 

Technical analysts say market bulls still have a slight technical advantage, at present, and gained some more momentum last week. It will take a close above solid resistance at the February high of US$6.28 to provide better upside technical momentum. A close below support at US$5.91 would provide fresh downside technical momentum.

 

First resistance for July soybeans is seen at US$6.20--Friday's high--and then at US$6.28. First support is seen at US$6.08--Friday's low--and then at US$6.04.

 

U.S. Midwest cash soybean basis bids are mostly unchanged to lower Monday, cash dealers said. Spot cash soybean bids were down 5 cents in Peoria, Ill., down 7 cents in St Louis, MO, and 8 cents lower in Evansville, Ind, according to cash sources Monday.

 

The DTN Meteorlogix Weather Service forecast said a few light showers are on tap for the western Midwest today, with mainly dry conditions Tuesday and Wednesday. Temperatures will average below normal today and Tuesday, near to below normal Wednesday. In the eastern Midwest, sprinkles and light showers are forecast today and Tuesday, with mainly dry conditions Wednesday. Temperatures will average below normal, Meteorlogix said.

 

The National Oilseed Processors Association said its members crushed 130.773 million bushels of soybeans in April. The average of analysts' estimates pegged the crush at 132.7 million bushels from a range of estimates that span between 130.4 million and 135.0 million bushels. Soyoil stocks were reported at 2.350 billion pounds compared to the average guess of 2.409 billion from a range of estimates between 2.362 billion to 2.504 billion. The yield on soyoil was 11.77 pounds per bushel. Analysts anticipated the yield to fall between 11.73 and 11.75 pounds per bushel.

 

In deliveries, a total of 251 delivery notices were posted against the CBOT May soybean contract. The house account at ADM Investor Services issued 100 lots. The last trade date assigned was May 12. A total of 37 delivery notices were posted against May soyoil. The house account at ADM Investor Services stopped 29 lots. The last trade date assigned was May 10. A total of 210 delivery notices were posted against the May soymeal contract. The house account at Bunge Chicago issued all 210 lots, with a customer account at RJ O'Brien stopping the 210 lots.

 

The Commodity Futures Trading Commission said Friday in its commitments of traders report that large speculative traders held net long futures and options positions totaling 8,784 lots in soybeans as of May 2, compared to the previous week's net shorts of 8,784 lots. In soyoil large specs held net long positions of 61,973 compared to 62,755 lots in the previous week. Large specs held net short positions of 12,621 in soymeal, up from net shorts of 12,621 lots reported in the previous week.

 

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 35% to 40% complete range Monday.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled slightly lower Monday, following weak sentiment on the Chicago Board of Trade. The benchmark September 2006 soybean contract settled RMB8 lower at RMB2,687 a metric tonne, after trading between RMB2,678/tonne and RMB2,699/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher in busy trading Monday, lifted by a sharp fall in the Malaysian ringgit and a rally in soyoil futures. The benchmark July CPO contract ended at MYR1,467 a metric tonne, up MYR19 from Thursday.