July 20, 2009

CBOT Soy Outlook on Monday: Up 8-12 cents amid bullish outside markets

Soy complex futures at the Chicago Board of Trade are called to open higher at the opening Monday. The key "outside markets" are in a bullish posture for the complex, as the value of the U.S. dollar is solidly lower against the other currencies, while crude oil and the U.S. stock indexes are higher.

Soybeans are called to open 8 to 12 cents a bushel higher, soybean meal up US$3.00 to US$5.00 a tonne and soybean oil futures are called to open up 40 to 60 points a pound.

While the key outside markets are bullish for the soy complex Monday, gains will be limited by continued non-threatening weather in the U.S. Corn Belt, and forecasts for more of the same, said Victor Lespinasse, long-time market analyst with www.grainanalyst.com.

The U.S. Corn Belt forecast this week calls for more mild temperatures and scattered rainfall chances. The National Weather Service 6-10-day forecast for July 25-29 calls for below-normal temperatures and normal to above-normal precipitation for the U.S. Corn Belt.

"Weather is really good," said Lespinasse. However, he added the the bearish weather patterns in the Corn Belt are likely already factored into the present price strucuture for soybean complex futures.

Reports that China will be auctioning some of its soybean stocks in the near term also could limit upside price pressure, said Lespinasse. However, he did not deem that development a major market factor impacting futures prices.

The technical picture also improved somewhat for the soybean market, said Lespinasse. November soybeans on Friday closed at a bullish weekly high close. Short covering in a market that is still overall near-term technically bearish was featured Friday and overnight, said a technical analyst. However, he said prices are still trading below a six-week-old downtrend line on the daily bar chart.

Commercial traders of CBOT soybean futures shed short positions in the latest reporting week, according to the latest commitments of traders report issued by the Commodity Futures Trading Commission on Friday afternoon. Commercials reduced their net short positions by 15,975 contracts, to total 258,097 contracts. Meantime, large speculative traders of soybean futures reduced their net long positions by 12,058 contracts, to total 67,124 contracts. The index or fund traders category showed soybean traders reduced their net short positions by 1,138 contracts, to total 18,071 contracts.

Soybean futures on the Dalian Commodity Exchange in China closed higher Monday, in line with Friday's gains in Chicago. A continued rebound in crude oil and metals prices as well as some favorable economic news prompted buying interest.