July 9, 2007

 

CBOT Soy Outlook on Monday: Seen down on favorable near-term weather

 

 

Chicago Board of Trade soybean futures are expected to begin Monday's day session on weaker footing, pressured by favorable near-term weather outlooks for Midwest crops.

 

CBOT soybean futures are called to start the session 5 to 7 cents lower.

 

In overnight e-CBOT trading, July soybeans were 6 3/4 cents lower at US$8.58 per bushel, and November was 5 3/4 cents lower at US$8.90 1/4.

 

The favorable weather outlooks with rain showers and cooler temperatures expected to roll through the central US this week is seen enticing participants to extract some risk premium from prices, analysts said.

 

Overnight weakness, pressure Asian soy and palm oil markets are expected to aide the defensive tone as well, traders said.

 

However, based on the markets overall bullish longer range fundamental outlooks, with expectations for supportive data in Thursday's supply and demand report, and slightly lower crop ratings anticipated in Monday's crop progress reports, downside pressure should remain limited a CBOT floor analyst said.

 

A technical analyst said a bullish pennant pattern has formed on the daily November soybean bar chart, with market bulls having a strong technical advantage. The next upside price objective for the November contract is closing prices above solid technical resistance at the contract high of US$9.03 1/2. The next downside price objective is closing prices below solid support at US$8.75, which is the top of a gap area on the daily bar chart.

 

First resistance for November soybeans is seen at US$9.03 1/2 and then at US$9.10. First support is seen at Friday's low of US$8.89 1/2 and then at US$8.80.

 

The DTN Meteorlogix Weather Service forecast said there is a chance for scattered to widely scattered showers and thundershowers Monday and Tuesday in the western Midwest. Mainly dry conditions are seen for Wednesday. Temperatures will average near to above normal Monday, below normal Tuesday and Wednesday. Mainly weather is expected Thursday, with a chance for scattered showers and possible thundershowers Friday, Meteorlogix forecasts.

 

A few thundershowers are possible Monday afternoon and overnight for western and northern areas of the eastern Midwest. Scattered showers and thundershowers are seen for Tuesday, with showers possibly lingering near the Ohio River early Wednesday. The heaviest rains should occur in the east and southern locations in the eastern Midwest. Temperatures should range from the upper 80s to the middle 90s Fahrenheit Monday, 80s to low 90s Tuesday, 70s and 80s Wednesday. There is a chance for scattered showers and possible thundershowers Friday into Saturday, Meteorlogix reports.

 

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.

 

Deliveries notices posted against July soybean futures totaled 2,802 lots. A customer account at Man Professional Clearing issued 1,062 lots, and stopped 1,094 lots. The last trade date assigned was July 6.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended slightly lower Monday amid speculation that supply and demand data due to be released Tuesday may be bearish. The benchmark September contract ended at MYR2,509 a metric tonne, down MYR11 from Friday.

 

On Singapore's Joint Asian Derivatives Exchange, trading activity remained sluggish, with volume totaling 24 lots.

 

Soybean futures traded on the Dalian Commodity Exchange settled lower Monday on falling soymeal futures prices. The benchmark January 2008 soybean contract settled RMB13 lower at RMB3,279 a metric tonne.