June 4, 2007

 

CBOT Soy Outlook on Monday: Flat to down 2 cents; weekend rains offset by demand

 

 

Soybean futures on the Chicago Board of Trade are seen starting Monday's day session steady to lower, with favorable weather conditions applying pressure while supportive world demand outlooks keep a floor under prices.

 

CBOT soybean futures are called to start the session flat to 2 cents lower.

 

In overnight e-CBOT trading, July soybeans were 1 1/2-cents lower at US$8.16 per bushel, and November soybeans were 1 1/4-cents lower at US$8.46.

 

The market is caught between good moisture moving through Midwest crop areas and support from technical strength and bullish long range world oilseed demand, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Spillover support from higher Malaysian palm oil futures should lend support to soybeans and soyoil futures, with lingering heat in the U.S. southeast keeping a floor under prices as well, Roose added.

 

Meanwhile, forecasted rains for the Midwest are expected to provide enough uncertainty to keep a lid on upside movement. However, with bullish long range demand prospects and technical strength, traders will watch speculative fund activity as the market targets contract highs as near tern upside objectives, analysts said.

 

A technical analyst said market bulls have solid upside momentum and gained more power Friday. The next upside price objective for July soybeans is closing prices above solid technical resistance at the contract high of US$8.22. The next downside price objective is closing prices below solid support at last week's low of US$7.94.

 

First resistance for July soybeans is seen at Friday's high of US$8.19 1/2 and then at US$8.22. First support is seen at US$8.10 and then at Friday's low of US$8.05 1/2.

 

The DTN Meteorlogix Weather Service forecast said rain and thunderstorms will maintain favorable moisture conditions for emerging and developing crops in the western Midwest during the next 3 days. In the eastern Midwest, some areas benefited from generous rains during the weekend, while other areas had much less. The outlook calls for a drier, warmer, trend in this area this week.

 

The Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds were reported to hold net long positions totaling 141,651 combined soybean futures and options contracts as of May 29, up from 141,189 the prior week.

 

Traditional large speculative traders were net long 101,710 contracts compared with net longs of 98,371 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 217,657 contracts, up from the previous week's 211,478 contracts.

 

On tap for Monday, the U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11 a.m. EDT (1500 GMT) and weekly crop progress reports at 4:00 p.m. EDT.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended higher Monday, as bullish sentiment kept the market on an uptrend despite an absence of fresh fundamental developments. The benchmark August contract ended MYR39 higher at MYR2,601 a metric tonne.

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Monday, following CBOT soybean's gains Friday on weather concerns. The benchmark January 2008 soybean contract settled RMB26 higher at RMB3,338 a metric tonne.