July 24, 2006

CBOT Soy Outlook on Monday: Up 2-4 cents, stabilizing recent losses

Soybean futures at the Chicago Board of Trade are poised to kick off the trading week on firm footing, in step with overnight action, as the market stabilizes after recent losses.

Soybeans are called to open 2 to 4 cents higher.

In e-CBOT trade, November soybeans were 3 1/2 cents higher at US$6.02 per bushel.

The market is set for more of a dead cat bounce early Monday, attempting to recover from oversold technical conditions as the trade remains on hold for August weather conditions for the soybean crop, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

Soybeans are an August crop and with the summer weather pattern unchanged with ridging in the western belt and warm, wet conditions in the eastern belt, futures are seemingly treading water, Roose added.

Traders say technical factors will be a feature, with traders eyeing 6-10 day weather forecasts for guidance that will paint a picture of early August weather.

Technical analysts said the market is now short-term oversold, technically, and due for at least a corrective bounce very soon. It will take a close above solid technical and psychological resistance at US$6.00 basis November futures to begin to revive upward strength.

The relative strength index for November soybeans stood at 31.17 at Friday's close, a RSI reading of 30.00 is considered oversold.

First resistance for November soybeans is seen at US$6.00 - Friday's high - and then at US$6.02 1/2 - the top of the downside price gap created Friday. First support is seen at US$5.95 1/2 - Friday's low - and then at US$5.91 - the June low.

Meanwhile, analysts say private forecasters are pointing to warmer conditions in the Midwest this week, with pop showers seen across the belt. Longer range 6-10 day and 11-14 day outlooks are leaning towards above normal temperatures with above normal precipitation.

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 6,289 lots in soybeans as of July 18, compared to the previous week's net longs of 2,973 lots. In soyoil large specs held net long positions of 73,222 compared to 70,458 lots in the previous week. Large specs held net short positions of 23,275 in soymeal, up from net shorts of 14,723 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 good-to-excellent ratings of U.S. soybean crops will come in steady to down 1 percentage point.

U.S. Midwest cash soybean basis bids are mostly unchanged Monday, cash dealers said. Spot cash soybean bids were up 5 1/2-cent in Peoria, Ill., and up 4-cent in St. Louis, Mo., according to cash sources Monday.

Rotterdam soybeans were lower and soymeal prices were mixed. European vegoils were mixed.

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Monday, following Friday's losses on the Chicago Board of Trade, analysts said. The benchmark September contract settled RMB24 lower at RMB2,437 a metric tonne, after trading between RMB2,429/tonne and RMB2,446/tonne.

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Monday amid continued profit-taking from a recent rally to 2-year highs. The benchmark October CPO contract ended at MYR1,565 a metric tonne, down MYR15 from Friday, when it fell MYR11.