July 17, 2006

 

CBOT Soy Outlook on Monday: Lower, e-CBOT, cooler temperatures

 

 

Traders anticipate a lower start to Chicago Board of Trade soybean futures, as the market follows the overnight trend amid less threatening weather forecasts for the Midwest.

 

Soybeans are called to open 4 to 6 cents lower.

 

In e-CBOT trade, November soybeans slid 6 3/4 cents at US$6.18 1/4 per bushel.

 

The market is poised for a lower start, with the National Weather Service projecting cooler temperatures and better chances of rains in the Midwest this week taking some of the edge off the market, analysts said.

 

The weekend did produce very hot conditions, but with temperatures backing off and the potential for rain, futures will look to trim some premium, as the soybean crop is still a couple of weeks away from its critical growing stage, said a CBOT commission house broker.

 

Market technicians said last week's high of US$6.39 1/2 in November soybeans is very strong overhead resistance for futures to overcome, and prices will have to push above that level to gain any fresh upside technical momentum. The next downside price objective for the November contract is filling an upside price gap on the daily bar chart--meaning pushing prices below US$6.12 1/2.

 

First resistance for November soybeans is seen at US$6.29 3/4--Friday's high--and then at US$6.36. First support is seen at US$6.19 1/2--Friday's low--and then at US$6.17.

 

The DTN Meteorlogix Weather Service forecast said morning weather models are in fair to good agreement. A strong upper level ridge now covers most of the country with a center over the Rockies and central plains, extending as far east as the east coast. A weak upper trough is near the northern Great Lakes this morning. The upper ridge is expected to shift westward and northward through the Rockies and western plains later this week and early next week while a trough dips southward into the Great Lakes and northeast.

 

This forecast should allow cooler temperatures to reach the Midwest crop areas, however the rainfall forecast more uncertain Meteorlogix said. No significant coverage of thundershowers is expected during the next 7 days, but near to below normal rainfall is forecast through the 6-10 day period. However, Meteorlogix cautions that the US model has more rain in its forecast in the 10 day forecast.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Monday, cash dealers said. Spot cash soybean bids were up 3 cents in Peoria, Ill., up 4 cents in Evansville Ind., and down 2 cents in St. Louis, according to cash sources Monday.

 

In deliveries, a total of 422 delivery notices were redelivered against the July soybean future. The house account at Term Commodities topped 306 lots. The last trade date assigned was July 14. A total of 73 delivery notices were posted against July soyoil. The house account at ADM Investor Services issued 72 lots. The last trade date assigned was July 12. Twenty six delivery notices were posted against July soymeal. The house account at Iowa Grain issued 25 lots and the house account at Bunge Chicago stopped all 26 lots. The last trade date assigned was July 14.

 

The Commodity Futures Trading Commission said Friday in its commitments of traders report that large speculative traders held net long futures and options positions totaling 2,973 lots in soybeans as of July 11, compared to the previous week's net shorts of 6,339 lots. In soyoil large specs held net long positions of 70,458 compared to 47,728 lots in the previous week. Large specs held net short positions of 14,723 in soymeal, down from net shorts of 14,932 lots reported in the previous week.

 

On tap for Monday, USDA is scheduled to release its weekly export inspections report 10 a.m. CDT and its weekly crop progress report at 3 p.m. CDT. Analysts anticipate soybean ratings for crops in good-to-excellent condition will decline by 1 to 3 percentage points.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Monday, following electronic trading losses on the Chicago Board of Trade, analysts said. The benchmark September contract fell RMB3 to settle at RMB2,483 a metric tonne, after trading between RMB2,476 and RMB2,495/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply higher Monday, with the benchmark contract reaching its highest level in almost two years, as the market continued to lean on crude oil's strength. The October CPO contract, which began trading as the new third-month benchmark Monday, ended at MYR1,541 a metric tonne, up MYR24 from Friday.