June 23, 2008

 

CBOT Soy Outlook on Monday: Down 10-15 cents, weather stays dominant issue

 

 

Soybean futures on the Chicago Board of Trade are seen starting Monday's day session on the defensive, pressured by improved weather for plantings and crop conditions, analysts said.

 

CBOT soybean futures are called to start the session 10 cents to 15 cents lower.

 

In overnight electronic trading, July soybeans were 12 3/4 cents lower at US$15.19 3/4 and November soybeans were 9 1/2 cents lower at US$14.99 1/2. December soyoil was 40 points lower at 65.25 cents per pound and July soymeal was US$3.20 lower at US$408.50 per short tonne.

 

Weather remains the dominant issue in the market, with aggressive planting progress from favorable weekend weather seen weighing on prices, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The DTN Meteorlogix weather forecast said a recent trend toward less heavy storms and warmer temperatures has likely helped improve the condition of crops in the U.S. Midwest. A cold front later this week bears watching however, as it could bring more storms to the region, Meteorlogix added.

 

Near term weather is expected to entice traders into trimming some risk premium from prices. Traders are also seen taking a cautious approach to market activity once again, watching for signs of rationing in the export market, with eyes on end-of-month acreage and stocks reports.

 

The uncertainty in demand and acreage will continue to keep volatility in the market, allowing it to bend, not break, Roose added.

 

On tap for Monday, the 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. Analysts anticipate export inspections to fall in a range of 6 million to 10 million bushels, with soybeans plantings estimated between 90% and 95% complete. Conditions ratings seen in a range of unchanged to up 3% from the previous week.

 

Meanwhile, crude oil and metal futures are lower and the U.S. dollar index is higher at the time of the outlooks publishing.

 

A technical analyst said market bulls are still in technical command of soybeans with still no signs of a market top being close at hand. The next upside price objective for November soybeans is to push and close prices above solid technical resistance at the contract high of US$15.66 3/4 a bushel. The next downside price objective is pushing and closing prices below solid technical support at last week's low of US$14.91 3/4.

 

First resistance for November soybeans is seen at US$15.30 and then at Friday's high of US$15.41 1/4. First support is seen at Friday's low of US$14.98 3/4 and then at US$14.91 3/4.

 

Index funds increased their net long CBOT soybean futures and options positions combined, which now totals 172,685 contracts as of June 17, up from 167,611 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 95,014 contracts compared with net longs of 96,098 in the previous week. Commercials held net short combined futures and options positions totaling 238,878 contracts, up from the previous week's 235,611 contracts.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Monday, declining along with their counterparts at CBOT Friday. The benchmark January 2009 soybean contracts settled RMB77 lower at RMB4,872/tonne, or down 1.6%, after trading between RMB4,846-RMB4,888/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher Monday despite weak soyoil futures, indicating that palm prices may be stabilizing, trade participants said. The benchmark September contract on the Bursa Malaysia Derivatives ended MYR7 higher at MYR3,558 a metric tonne.