June 26, 2006

 

CBOT Soy Outlook on Monday: Grinding lower; lack of weather concerns

 

 

Traders at the Chicago Board of Trade anticipate a lower start for soybean futures, as the lack of weather concerns and a quiet news front are expected to keep the market grinding lower.

 

Soybeans are called to open 4 to 6 cents lower.

 

In overnight electronic trade, July soybeans were 5-cent lower at US$5.75 1/2, November soybeans were 6-cent lower at US$6.00 1/2, July soymeal was US$2.10 lower at US$174.40 and July soyoil was 20 points lower at 24.42 cents per pound.

 

With non-threatening weather forecasted for the next 10-days, and anticipation of improved crop ratings, soybeans are poised to start the day on the defensive, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Weekend rains, more showers on tap for the Midwest this week coupled with mild temperatures and a lack of support from outside markets is laying the ground work for prices to drift lower, traders said.

 

However, heading into Friday's acreage report, with analysts and traders debating the size of the cut in soybean acres from the U.S. Department of Agriculture's March planting intentions report should provide some stability to the market and limit downside potential, added Roose.

 

Meanwhile technical analysts said soybean futures are in the lower boundary of a choppy trading range on the daily bar chart - bound by solid support at the June low of US$6.00 and the May high of US$6.39. The next upside price objective for November futures is closing prices above resistance at US$6.20. A close back below technical support at this month's low of US$6.00 would give provide better downside technical momentum.

 

First resistance for November soybeans is seen at US$6.09 1/2 - Friday's high - and then at US$6.15. First support is seen at US$6.05 - Friday's low - and then at US$6.00.

 

The DTN Meteorlogix Weather Service forecast said Monday's U.S. and European models are in fair to good agreement. An overall pattern of a ridge in the west, trough in the east will dominate the U.S. during the next 10 days. This pattern will tend to favor more shower activity in the eastern Midwest than in the west however all areas will see periods of scattered showers. There is no significant heat in this pattern for the Midwest with the ridge in the western U.S., Meteorlogix said.

 

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 17,279 lots in soybeans as of June 20, compared to the previous week's net shorts of 4,946 lots. In soyoil large specs held net long positions of 22,343 compared to 46,384 lots in the previous week. Large specs held net short positions of 4,318 in soymeal, up from net shorts of 3,692 lots reported in the previous week.

 

Taiwan Sugar Corp. is seeking 25,000 metric tonnes of U.S. corn and 10,000 tonnes of U.S. soybeans, for July-August delivery, in a tender to Tuesday, a trader in Taipei said Monday.

 

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.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Monday, cash dealers said. Spot cash soybean bids were up 5-cent in Keokuk, Iowa, up 6-cent in Bloomington, Ill., and down 2-cent in Evansville, Ind., according to cash sources Monday.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Monday, largely tracking weakness in Chicago Board of Trade soybean futures Friday. Dalian's September contract fell RMB18 from Friday to settle at RMB2,584/tonne. No. 2 soybean contracts, which are encouraged to be delivered with soybeans harvested from genetically modified crops, settled lower, with the benchmark September contract settled RMB6 lower at RMB2,503/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended marginally lower after a subdued trading day Monday, with the release of export data having little impact on the market. The benchmark September CPO contract ended at MYR1,465 a metric tonne, down MYR3 from Friday.