June 19, 2006

 

CBOT Soy Outlook on Monday: Down 7-9 cents; favorable growing conditions

 

 

A defensive theme is seen for Chicago Board of Trade soybean futures to start the week, as favorable growing conditions across the central U.S. applies pressure to prices.

 

Soybeans are called to open 7 to 9 cents lower.

 

In overnight electronic trade, July soybeans were 8 1/4-cent lower at US$5.92, November soybeans were 7 1/2 cents lower at US$6.19 1/2, July soymeal was US$2.40 lower at US$178.50 and July soyoil was 30 points lower at 24.56 cents per pound.

 

Scattered weekend rains coupled with outlooks for the rains to continue during the week with above normal temps abating should allow the market to take some weather premium out, said John Kleist of Kleist Ag Consulting.

 

A quiet news front is expected to keep attention focused on crop conditions with expectations for lower soybean acres in the U.S. Department of Agriculture's June 30 acreage report making weather more important to the trade, analysts said.

 

Weakness in outside inflationary markets should take some of the "speculative fervor" away from the market as well, Kleist added.

 

Technical analysts say futures are still in a choppy trading range on the daily bar chart, and have pushed into a wedge pattern. The next upside price objective for the July future is closing prices above this month's high of US$6.11. A close back below technical support at US$5.83 1/2 would provide fresh downside technical momentum.

 

First resistance for July soybeans is seen at US$6.01 - Friday's high - and then at US$6.05 - last week's high. First support is seen at US$5.93 1/2 - Friday's low - and then at US$5.89 - last week's low.

 

The DTN Meteorlogix Weather Service forecast said today's US and European models are in fair agreement. The main features during the 6-10 day period should be weak upper level troughing over the Ohio and Mississippi rivers. This is not a very hot pattern for the eastern plains, the Midwest or the Delta. It could be wet in parts of the Midwest and Delta as well as in either the northern plains or the Canadian Prairies.

 

In the western Midwest, a few thundershowers are on tap for Monday, with a chance for scattered showers and thundershowers Tuesday or Wednesday. Temperatures will average near to above normal Monday and Tuesday, near to below normal Wednesday, Meteorlogix said. Meanwhile, in the eastern belt, mainly dry conditions with only a few light showers are expected Monday, with a chance for scattered to widely scattered thundershowers, Tuesday or Wednesday. Temperatures will average near to above normal, Meteorlogix added.

 

On tap for Monday, USDA is scheduled to release its weekly export inspections report 10:00 a.m. CDT and its weekly crop progress report at 3:00 p.m. CDT.

 

The Commodity Futures Trading Commission said Friday in its commitments of traders report that large speculative traders held net short futures and options positions totaling 4,946 lots in soybeans as of June 13, compared to the previous week's net shorts of 13,105 lots. In soyoil large specs held net long positions of 46,384 compared to 54,260 lots in the previous week. Large specs held net short positions of 3,692 in soymeal, down from net shorts of 4,155 lots reported in the previous week.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Monday, cash dealers said. Spot cash soybean bids were down 8 cents in Bloomington, Ill., and up 1-cent in Decatur, Ind., according to cash sources Monday.

 

Rotterdam soybeans were mostly higher and soymeal prices were mixed. European vegoils were mixed.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Monday, amid losses in Chicago Board of Trade soybean futures during electronic trade, analysts said. The benchmark September 2006 soybean contract fell RMB9 to settle at RMB2,614 a metric tonne, after trading between RMB2,612/tonne and RMB2,620/tonne. Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly lower Monday amid pressure from weaker soyoil futures and abundant nearby supply. The benchmark September CPO contract ended at the day's low of MYR1,455 a metric tonne, down MYR9 from Friday.