July 3, 2006

 

CBOT Soy Outlook on Monday: Up 6-8 cents, e-CBOT, weather outlooks

 

 

Soybean futures on the Chicago Board of Trade are poised for a firm opening, following the overnight theme, as weather concerns continue to provide price strength.

 

Soybeans are called to open 6- to 8-cent higher.

 

In overnight electronic trade, July soybeans were 7 3/4-cent higher at US$6.02 1/2, November soybeans were 7 3/4-cent higher at US$6.30 1/4, while December soymeal was US$2.40 higher at US$177.00 and December soyoil was 22 points higher at 27.49 cents per pound.

 

The market has a relentless belief to keep and add risk premium to prices, with a warmer and drier weekend in the western Midwest and drier long-range forecast for the region enticing traders to hold premium in the market, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Carryover momentum from Friday's supportive acreage and stocks data is expected to aide the firm tonnee, with weather the dominant influence on prices with planted acres factored into the equation, analysts said.

 

However, the market's price strength may run into resistance after the first half hour, with trade positioning coming into play ahead of Tuesday's market closing for the U.S. Independence Day holiday, Roose added.

 

Technical analysts said the market produced a weekly high close Friday, regaining upside technical momentum-and repaired recent near-term chart damage. It will take a close back above resistance at US$6.35 a bushel basis November futures to provide even better upside technical momentum, analysts add.

 

First resistance for November soybeans is seen at US$6.20 and then at US$6.29-Friday's high. First support is seen at US$6.18 - Friday's low - and then at US$6.15.

 

The DTN Meteorlogix Weather Service forecast said Monday's U.S. and European weather models are in fair to good agreement during the next 5-6 days and then poor agreement during days 7-10. Both models show a trough deepening over the Midwest and the ridge weakening during the next few days. Both models show the trough shifting eastward and the ridge following during the Thursday to Saturday time frame. The US model shows the next downstream trough moving east across Canada and south into the Midwest later in the 7-10 day time period. This would reintroduce showers and cooler temperatures to the Midwest region during this time. The European model holds the next trough along the west coast during this time and maintains higher heights over the Midwest. However, the ridge that is shown over the Midwest is not very strong. This model would suggest a warmer to hotter and drier period for the Midwest.

 

In deliveries, a total of 1,788 delivery notices were redelivered against the July soybean future. The last trade date assigned was June 30. A total of 840 delivery notices were redelivered against July soyoil, with the house account at ADM Investor Services was the principle stopper of 631 lots. The last trade date assigned was June 26. 623 delivery notices were posted against the July soymeal contract. The trade date assigned was June 15.

 

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 32,276 lots in soybeans as of June 27, compared to the previous week's net shorts of 17,279 lots. In soyoil large specs held net long positions of 29,997 compared to 22,343 lots in the previous week. Large specs held net short positions of 19,601 in soymeal, up from net shorts of 4,318 lots reported in the previous week.

 

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 down 5-cent in Sioux City, Iowa, and down 2-cent in Quincy, Ill., according to cash sources Monday.

 

Rotterdam soybeans and soymeal prices were higher. European vegoils were steady to higher.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Monday, tracking solid gains by CBOT soybean futures Friday. The benchmark September contract rose RMB15 to settle at RMB2,603 a metric tonne, after trading between RMB2,595/tonne and RMB2,620/tonne.

 

Meanwhile, China's soybean output is expected to fall 2.7% this year to 15.9 million metric tonnes, with acreage sliding 5.1% to 9.1 million hectares, China's National Grain and Oils Information Center said Monday.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended moderately higher Monday, boosted by gains in soyoil futures. The benchmark September contract ended at MYR1,499 a metric tonne, up MYR8 from Friday.