May 26, 2009

 

CBOT Soy Outlook on Tuesday: Down 8-10 cents; outside markets, planting progress

 

 

Soybean futures on the Chicago Board of Trade are expected to start Tuesday's day session on weak footing, under pressure from outside market influences and good planting progress in the Midwest.

 

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

 

Weather forecasts projecting some windows of opportunity to get the crop planted later in the week and commodity negative news for prices are seen weighing on futures, said Don Roose, president of U.S. Commodities.

 

The U.S. dollar is higher, stock indexes and crude oil futures are lower.

 

Traders anticipate profit taking will resurface on price weakness, with the market seemingly running out of gas to the upside overnight, Roose added.

 

The absence of any other fresh news will keep technical factors in play, with traders eyeing bulls spreads for signs of old/new crop spreads continuing to narrow after rallying to new highs previously.

 

The July/November bull spread settled at US$1.34 1/2 a bushel Friday, down from Thursday's settlement of US$1.51 1/2 cents.

 

A market technician said first resistance for July soybeans is seen at US$11.77 1/2 and then at last week's high of US$11.89 1/2. First support is seen at Friday's low of US$11.64 and then at US$11.50.

 

DTN Meteorlogix Weather said significant planting progress for corn and soybeans should have been made in the Midwest during the past 7 days especially in the previously wet areas of the eastern Midwest. However, rains early this week will again slow planting progress.

 

Large speculative traders now hold 84,364 net long positions in CBOT soybean futures and options combined contracts as of May 19, compared with net longs of 82,752 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 126,685 contracts from 123,589 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 187,469 contracts, up from the previous week's 182,066 contracts, as reported in the CFTC supplemental report.

 

On tap for Tuesday, 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. The reports normally released on Monday were delayed due to the Memorial Day holiday.

 

In other news, China is expected to import 4.29 million metric tonnes of soybeans in May, which would mark an all-time high, according to an initial estimate in a report by the Ministry of Commerce. The country is expected to import 4.11 million tonnes of the crop in June, said the report. China imported 3.71 million tonnes of soybeans in April, up 55% on year.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled slightly higher Tuesday even as its upward momentum waned as traders stayed on the sidelines ahead of the Dragon Boat holiday. Crude palm oil futures on Malaysia's derivatives exchange continued their downward spiral Tuesday on higher output, a rise in imports from Indonesia, weak demand for palm oil to make biofuel and technical selling pressure, said trade participants.