May 18, 2009

 

CBOT Soy Outlook on Monday: Lower; drier weather to apply pressure

 

 

Soybean futures on the Chicago Board of Trade are seen starting Monday's day session lower, pressured by improved planting weather for the U.S. Midwest.

 

CBOT soybean futures are seen opening 8 cents to 10 cents lower, with soy product futures following overnight price action.

 

Weather is the dominant issue in the market this morning, with warmer, drier conditions in the central U.S. providing some planting opportunities for farmers expected to attract selling pressure, said Vic Lespinasse, analyst with Grainsanalyst.com.

 

The drier weather will put prices on the defensive, despite the outside markets pointing higher, he added.

 

The market had rallied to over seven month highs last week on tight supplies and a lack of planting progress due to rains.

 

Follow through selling from Friday's declines is expected to add to the losses, with profit taking pressure expected to surface after the market's recent run to over 7-month highs.

 

However, tight availability of old crop stocks and some private weather forecasters pointing to rains returning to the Midwest next week are seen limiting losses.

 

A technical analyst said first resistance for July soybeans is seen at US$11.47 3/4 and then at Friday's high of US$11.56 1/4. First support is seen at US$11.18 and then at US$11.00.

 

DTN Meteorlogix Weather said the driest week of the growing season to date is expected for the Midwest this week. This will allow for the wet areas of the southern and eastern Midwest to dry out and the some increase in planting especially over higher ground and sandier soils. However, the wetter areas would not be able to begin planting until next week. Whether it can remain as dry next week is questionable with indications today that rainfall could increase.

 

In demand news, U.S. Department of Agriculture announced private exporters reported the sale of 120,000 metric tonnes of soybeans to Egypt for delivery in the 2008-09 marketing year and 116,000 tonnes of soybeans to China in the 2009-10 marketing year.

 

Large speculative traders now hold 82,752 net long positions in CBOT soybean futures and options combined contracts as of May 12, compared with net longs of 76,276 in the previous week, according to the Commodity Futures Trading Commission in its supplemental commitment of traders report.

 

Index funds decreased their net long positions in CBOT soybean futures and options. The combined number dropped to 123,589 contracts from 126,888 the prior week, according to the CFTC in its supplemental commitments of traders report released Friday. Commercials held net short combined futures and options positions totaling 182,066 contracts, up from the previous week's 178,109 contracts, as reported in the CFTC supplemental report.

 

On tap for Monday, USDA 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 overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Monday, tracking a decline in CBOT counterparts. Crude palm oil futures on Malaysia's derivatives exchange ended at their lowest since April 29 as weak soyoil futures prompted profit taking on worries that palm oil might be over-priced, said trade participants.