June 2, 2008

 

CBOT Soy Outlook on Monday: Down 3-5 cents; overnight theme, outside markets

 

 

Soybean futures on the Chicago Board of Trade are seen starting Monday's day session on the defensive, following the overnight theme, with bearish outside market influences applying pressure.

 

CBOT soybean futures are called to start the session 3 to 5 cents lower. In overnight electronic trading, July soybeans were 3 1/4 cents lower at US$13.60 1/4, November soybeans were 7 1/4 cents lower at US$13.47 1/4. July soyoil was 40 points lower at 60.91 cents per pound and July soymeal was US$4.00 higher US$345.50 per short tonne.

 

The combination of a firmer U.S. dollar and lower crude oil prices are setting the stage for a lower start to the session, with mild consolidation from Friday's strong gains aiding the declines, analysts said.

 

However, supportive underlying fundamentals with unresolved strike issues in Argentina, tight projected ending stocks and lingering planting issues continue to provide bullish features to limit downside pressure, analysts added.

 

Nevertheless, futures remain in a sideways trading pattern, chopping around in volatile fashion awaiting the next fundamental event to break prices out of a two-month range, a trader said.

 

A technical analyst said the next downside price objective for the bears is pushing and closing prices below psychological support at US$13.00. The next upside price objective for the bean bulls is to push and close prices above solid technical resistance at last week's high of US$13.84 a bushel.

 

First support for July soybeans is seen at US$13.50 and then at US$13.30. First resistance is seen at Friday's high of US$13.65 and then at US$13.76.

 

Index funds increased their net long CBOT soybean futures and options positions combined, which now totals 165,530 contracts as of May 27, down from 166,136 the prior week, according to the Commodity Futures Trading Commission, as reported Friday in its supplemental commitment of traders report. Traditional large speculative traders were net long 84,169 contracts compared with net longs of 86,936 in the previous week. Commercials held net short combined futures and options positions totaling 215,377 contracts, up from the previous week's 218,524 contracts.

 

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 other news, Argentina's National Guard arrested eight protesting farmers who attempted to block a highway Friday, ratcheting up tensions amid a nationwide farm strike over grain export taxes. Farmers in the neighboring province of Entre Rios immediately blocked a highway near the town of Gualeguaychu in response to the detentions.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Monday, tracking gains on CBOT Friday. The benchmark January 2009 soybean contract settled RMB32 or 0.7% higher at RMB4,495 a metric tonne, after trading between RMB4,468-RMB4,518/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended little changed Monday as lower May exports damped sentiment despite some positive cues from soyoil, trade participants said. The benchmark August contract on the Bursa Malaysia Derivatives ended MYR9 higher at MYR3,511 a metric tonne, off an intraday high of MYR3,548.