May 19, 2008

 

CBOT Soy Outlook on Monday: Down 10-15 cents, strike concerns, profit taking

 

 

Soybean futures at the Chicago Board of Trade are seen starting Monday's day session lower, backpedaling on profit taking from Friday's gains amid signs of improving relations in the Argentina farmers' strike.

 

CBOT soybean futures are called to start the session 10 to 15 cents lower. In overnight electronic trading, July soybeans were 19 1/2 cents lower at US$13.58 1/2, November soybeans were 16 cents lower at US$13.33 1/4. July soyoil was 53 points lower at 61.32 cents per pound and July soymeal was US$6.90 lower US$343.10 per short tonne.

 

Reports of Argentine farm groups looking at possibly making moves to that could improve the chances of ending the riff between the government and farmers are enticing traders to trim some premium from prices, analysts said.

 

Signaling a willingness to end a disruptive blockade on grain sales, Argentina's four rural organizations that coordinated the farmer's strike have brought forward a key meeting on the matter to Monday from Wednesday.

 

Eduardo Buzzi, leader of the Argentine Agrarian Federation, which represents the critical constituency of small-scale farmers, told reporters Sunday that the farmers felt they needed to make a gesture to "pacify the nation" after two months of bitter conflict with the government over a soybean export tax.

 

However, bullish outside influences, with weakness in the U.S. dollar coupled with higher crude oil and metal futures, are expected to lend support to limit downside pressure, analysts added.

 

The market is poised for another volatile, wide daily trading range, as traders debate which features will impact prices the most, as the trade remains on edge with soybean planting progress set to up stage demand factors near term, a CBOT floor broker said.

 

A technical analyst said July soybeans are trading in the upper boundary of a big sideways trading range between the April high of US$14.15 and the May low of US$12.44. The next downside price objective is pushing and closing prices below solid technical support at US$13.50. The next upside price objective is to push and close prices above solid technical resistance at Friday's high of US$14.02 a bushel.

 

First support for July soybeans is seen at Friday's low of US$13.66 and then at US$13.50. First resistance is seen at US$14.02 and then at US$14.15.

 

On tap for Monday, 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 4:00 p.m. EDT.

 

Index funds increased their net long CBOT soybean futures and options positions combined, which now totals 170,835 contracts as of May 13, up from 169,119 the prior week, according to Commodity Futures Trading Commission, as reported Friday in its supplemental commitment of traders report. Traditional large speculative traders were net long 82,705 contracts compared with net longs of 77,716 in the previous week. Commercials held net short combined futures and options positions totaling 221,624 contracts, up from the previous week's 211,441 contracts.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled mostly higher Monday, following gains on CBOT at the end of last week. The benchmark January 2009 soybean contract settled up RMB6, or 0.13%, at RMB4,505 a metric tonne.

 

Asian crude palm oil futures on Malaysia's derivatives exchange were closed Monday for a public holiday.