August 14, 2006

 

CBOT Soy Outlook on Monday: Down 3-5 cents; crop weather sustains downtrend

 

 

Soybean futures on the Chicago Board of Trade are seen starting the week on the defensive, continuing the recent downtrend as bearish crop weather in the Midwest keeps buyers on the run.

 

Soybeans are called to open 3 to 5 cents lower.

 

In e-CBOT trade, November soybeans were 4 1/2 cents lower at US$5.63 3/4 per bushel.

 

Forecasts calling for favorable conditions for pod-filling soybeans is promoting ideas of large soybean yields, and with technical weakness, analysts anticipate follow-through selling from Friday to extend losses.

 

However, analysts also say the market has reached oversold levels, and with a seasonal trend of soybeans rallying in mid-August, traders remain on guard for signs of downside exhaustion. Nevertheless, without some bullish spark to attract buyers, it will be tough to launch an upside offensive in the face of ample nearby supplies, said a CBOT commission house broker.

 

Technical analysts said serious near-term chart damage was inflicted last week. The next downside price objective for November soybeans is solid technical support at US$5.50. It will take a close above technical resistance at US$5.75 1/2 to begin to provide the bulls with confidence that steep slide in prices is over.

 

First resistance for November soybeans is seen at US$5.75 1/2 and then at US$5.80. First support is seen at US$5.65 1/4 - Friday's low - and then at US$5.60.

 

The DTN Meteorlogix forecast said showers may linger over central Missouri during Monday, while dry conditions will be common elsewhere in the western Midwest. Mainly dry conditions are on tap for Tuesday and Wednesday, with temperatures averaging near normal Monday, near to above normal Tuesday, and above normal Wednesday.

 

In the eastern Midwest, scattered showers and thunderstorms are forecast for early this week and then again late in the week favoring filling soybeans as well as improving conditions in some of the dry areas of western Illinois, Meteorlogix forecasts.

 

The National Oilseed Processors Associated reported its members crushed 142.6 million bushels of soybeans during July. The figure was above the average trade estimate of 136.9 million bushels and well above the 131.3 million NOPA reported for the month of June. The cumulative crush for the year is reported at 1.400 billion bushels compared to 1.380 reported through July of 2005. Soyoil stocks increased to 2.688 billion pounds, up from 2.542 billion in June. The average of trade estimates projected stocks at 2.595 billion pounds.

 

In deliveries, a total of 317 delivery notices recirculated against the August soybean future. The last trade date assigned was Aug. 11. 30 delivery notices recirculated against the August soymeal contract. The house account at Bunge Chicago stopped 26 lots. The trade date assigned was Aug. 10. Two hundred and twelve delivery notices were posted against August soyoil. A customer account at RJ O'Brien stopped all the deliveries. The last trade date assigned was Aug. 8.

 

The Commodity Futures Trading Commission on Friday reported large speculative traders were net short 45,201 combined soybean futures and options contracts as of Aug. 8. Speculative funds were reported net long soyoil future and options to tune of 65,146 lots. Large speculative traders were reported net short combined futures and options positions in soymeal by 38,161 contracts.

 

On tap for Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 10 a.m. CDT. USDA will also release its weekly crop progress report 3 p.m. CDT. Analysts anticipate U.S. soybeans rated in good to excellent conditions will rise by 1 to 3 percentage points.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Monday, pressured by oversupply, said an analyst. The most active January 2007 contract settled RMB25 lower at RMB2,520 a metric tonne, after trading between RMB2,509 and RMB2,535/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Monday, dragged down by weakness in related commodities such as soyoil. The benchmark October CPO contract ended at MYR1,647 a metric tonne, down MYR12 from Friday.