July 16, 2007

 

CBOT Soy Outlook on Monday: Sharply lower on less threatening weather

 

 

Chicago Board of Trade soybean futures are expected to start Monday's day session sharply lower, as traders extract risk premium on less threatening weather forecasts.

 

CBOT soybean futures are called to start the session 24 to 27 cents lower.

 

In overnight e-CBOT trading, August soybeans were 25 3/4 cents lower at US$8.96 per bushel, and November was 27 1/4 cents lower at US$9.21 1/2.

 

Weather is the key driver of near term direction, and with weather models pointing toward hot conditions staying further west than Friday's outlooks, futures are poised to start under pressure, analysts said. With a good chance of moisture moving into the central US at midweek, the market should garner added pressure, analysts added.

 

Technically the market is overbought following a five-day string of new contract highs, traders said. Nevertheless, futures remained underpinned by bullish new crop fundamental outlooks, with traders viewing the expected declines as a near term price correction, a CBOT floor analyst added.

 

A technical analyst said market bulls still have the strong technical advantage and are looking for still more on the upside in the near term, amid no early clues of a market top being close at hand. The next major upside price objective for November soybeans is closing prices above solid technical resistance at US$10.00. The next downside price objective is closing prices below solid support at US$9.25.

 

First resistance for November soybeans is seen at Friday's contract high of US$9.49 1/2 and then at US$9.75. First support is seen at US$9.40 and then at Friday's low of US$9.31 1/2.

 

The DTN Meteorlogix Weather Service forecast said a few showers and temperatures not quite as hot as was expected will favor reproductive soybeans during this week in the western Midwest. However, soils will continue to dry out, especially in the western areas.

 

In the eastern Midwest, reproductive soybeans will benefit from scattered showers and thundershowers during the week with temperatures not as hot as was expected from late last week, Meteorlogix said.

 

The National Oilseed Processors Association said Monday its June soybean crush rate was 141.6 million bushels. That was down slightly from the May figure of 143.4 million bushels and down from 131.3 million at the same period last year. Soyoil stocks were reported at 2.951 billion pounds. The stocks were up from the May stock figure of 2.924 billion.

 

The Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds were reported to hold net long positions totaling 149,863 combined soybean futures and options contracts as of July 10, up from 147,116 the prior week.

 

Traditional large speculative traders were net long 118,757 contracts compared with net longs of 105,595 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 248,854 contracts, up from the previous week's 231,694 contracts.

 

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.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended lower Monday, dragged down by losses in soyoil and weak export data for the first half of the month. The benchmark October contract ended at MYR2,540 a metric tonne, down MYR43 from Friday.

 

On Singapore's Joint Asian Derivatives Exchange, CPO futures ended lower, with the October contract down US$8.75 at US$744.50/tonne.

 

Soybean futures traded on the Dalian Commodity Exchange settled lower Monday on ample stocks, shrugging off a fifth consecutive record high set at the CBOT Friday. The benchmark January 2008 soybean contract settled RMB36 lower at RMB3,351 a metric tonne.