July 30, 2007

 

CBOT Soy Outlook on Monday: Up 7-9 cents; e-CBOT, adding premium back

 

 

Chicago Board of Trade soybean futures are seen starting Monday's day session on firm footing, underpinned by supportive overnight influences with traders expected to add risk premium back into the market.

 

CBOT soybean futures are called to start the session 7 to 9 cents higher.

 

In overnight e-CBOT trading, August soybeans were 8 cents higher at US$8.23 1/2 per bushel, and November was 8 1/2 cents higher at US$8.49.

 

Warm, dry weather conditions expected in the Midwest this week will entice traders to add some risk premium back in the market, and with prices a little oversold and Asian markets strong overnight, futures are poised for a higher start, said Don Roose, president US Commodities in West Des Moines, Iowa.

 

There is enough uncertainty surrounding the 2007 US crop to keep prices underpinned, but forecasts for rains to move back into the region next week should limit upside movement, Roose added.

 

Meanwhile, drought concerns for Chinese soybean crops and price strength in Malaysian palm oil futures are seen aiding the supportive tone, analysts said.

 

A technical analyst said bulls and bears are struggling for near-term technical momentum, with neither gaining any headway last week. The next downside price objective for November soybeans is closing prices below solid support at last week's low of US$8.34. The next upside price objective is closing prices above solid technical resistance at US$8.69 1/2, which would fill on the upside last week's downside price gap on the daily bar chart.

 

First resistance for November soybeans is seen at Friday's high of US$8.49 and then at US$8.55. First support is seen at US$8.34 and then at US$8.30.

 

The DTN Meteorlogix Weather Service forecast calls for some significant changes from Friday's outlook, with some light showers in the forecast for the western Midwest on Thursday. Some rain is still in the forecast for the northern Midwest over the weekend. Monday's 8-10 day forecast charts continue the ideas from the Sunday model run of forecasting a significant rain event across the Midwest during the early to middle part of next week.

 

Near term, the western Midwest will have high temperatures in the upper 80s to middle 90s Fahrenheit along with little rainfall during the next 5-7 days. This will deplete soil moisture and increase stress on filling corn and soybeans, Meteorlogix reports. The greatest stress will be in the dry areas of eastern South Dakota and southwest Minnesota. Some timely beneficial rain is possible next week.

 

In the eastern Midwest, despite beneficial rainfall late last week, high temperatures in the upper 80s to middle 90s this week along with little rainfall will deplete soil moisture. Significant rains are expected to return next week, Meteorlogix forecasts. 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 154,132 combined soybean futures and options contracts as of July 24, down from 154,595 the prior week.

 

Traditional large speculative traders were net long 93,812 contracts compared with net longs of 108,762 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 220,782 contracts, down from the previous week's 240,469 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 other news, the Korea Trade Commission said Monday it has halted its antidumping investigation on soybean oil imported from Argentina and the U.S. after local food companies dropped charges against them.

 

In overseas markets, Crude palm oil futures on Malaysia's derivatives exchange ended higher Monday in heavy trade, boosted by rising soyoil futures and optimism demand would continue to grow strongly in the coming months. The benchmark October contract settled at MYR2,636 a metric tonne, up MYR53 from Friday.

 

In Singapore's Joint Asian Derivatives Exchange, CPO futures were also higher, with October up US$21.75 at US$780/tonne.

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Monday on domestic weather concerns. The benchmark January 2008 soybean contract settled RMB47 higher at RMB3,354 a metric tonne.