May 22, 2006

 

CBOT Soy Outlook on Monday: Down 3-5 cents; outside market pressure, weather

 

 

Chicago Board of Trade soybean futures are expected to start Monday's trading session on the defensive, pressured by general weakness in commodities and favorable planting conditions in the Midwest.

 

Soybeans are called to open 3 to 5 cents lower.

 

In overnight electronic trade, July soybeans were 3 3/4 cents lower at US$5.83 1/4, July soymeal was US$0.40 lower at US$173.00 and July soyoil was 23 points lower at 24.80 cents per pound.

 

The market is poised to start lower, with the bearish influence of outside markets, a poor technical close Friday, and favorable weather conditions in the Midwest leaving bullish traders with little grab onto, analysts say.

 

In early Monday trade, gold, silver and crude oil are lower, with the U.S. dollar firmer against other major currencies.

 

Spillover pressure from the neighboring corn and wheat markets are seen adding to the lower theme, as the market's bearish underlying fundamentals garner more attention in the absence of outside supportive features, traders add.

 

Market technicians say good downside technical momentum was achieved last week. The next major downside price objective is closing prices below technical support at the January low of US$5.81. It will take multiple closes back above major psychological resistance at US$6.00 to provide some fresh upside technical momentum.

 

First resistance for July soybeans is seen at US$5.93 1/2--Friday's high--and then at US$6.00. First support is seen at US$5.85 1/2--Friday's low--and then at US$5.81.

 

The DTN Meteorlogix Weather Service forecast said mainly dry are on tap for the western Midwest today, with chances for scattered showers and thundershowers Tuesday into Wednesday. Temperatures will average near to above normal during this period.

 

Mainly dry are seen for today and Tuesday in the eastern Midwest, with a chance for scattered showers Wednesday. Temperatures will average below normal today, near to below normal Tuesday, and near to above normal Wednesday, Meteorlogix said.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Monday, cash dealers said. Spot cash soybean bids were up 20 cents in Quincy, Ill., down 3 cents in Sioux City, IA, and up 1 cent in St Louis, MO, according to cash sources Monday.

 

Rotterdam soybeans and soymeal prices were lower, and European vegoils were mostly steady.

 

Taiwan Sugar Corp. is seeking to buy a combination cargo of 23,000 metric tonnes of U.S.-origin corn and 12,000 tonnes of U.S.-origin soybeans for June 11-25 delivery in a tender Wednesday, said a trader in Taipei Monday.

 

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 10,290 lots in soybeans as of May 16, compared to the previous week's net longs of 3,651 lots. In soyoil large specs held net long positions of 65,531 compared to 61,973 lots in the previous week. Large specs held net short positions of 15,196 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 area of 50% complete Monday.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Monday, following losses in Chicago Board of Trade soybean futures Friday, and other falling commodities futures. The benchmark September 2006 soybean contract settled RMB19 lower at RMB2,629 a metric tonne, after trading between RMB2,616/tonne and RMB2,639/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Monday, dragged down by disappointing export estimates and weakness in soyoil futures. The benchmark August CPO contract ended at MYR1,443 a metric tonne, down MYR9 from Friday after moving between MYR1,440 and MYR1,452/tonne.