August 31, 2009

 

CBOT Soy Outlook on Monday: Down 20-25 cents on outside markets, bearish weather

 

 

Soybean futures on the Chicago Board of Trade are expected to slide Monday, following the overnight theme on bearish outside market influences and a lack of a weather threat for developing crops.

 

CBOT soybean futures are seen opening 20 cents to 25 cents lower.

 

Weakness in world equity markets amid a 7% drop in Chinese stocks, declines in crude oil and a firmer U.S. dollar are casting a negative cloud over the market, analysts said.

 

Improving weather outlooks for the U.S. Midwest, with the absence of a frost threat provide fundamental pressure to aid the defensive tone.

 

Meanwhile, market talk of China planning to subsidize soybean sales out of their strategic reserves adds to the lower theme, AgResource said in a morning market note.

 

Soybeans are "hypersensitive" to Chinese markets, as China is the driver of world commodity demand, AgResource added in the note.

 

However, tight nearby supplies are a supportive feature expected to limit downside risks.

 

A technical analyst said first resistance for November soybeans is seen at Friday's high of US$10.17 1/2 and then at US$10.30. First support is seen at US$10 and then at Friday's low of US$9.91.

 

The T-storm Weather forecast said there are no frost issues for the U.S. Midwest during the next seven days. However, a lack of heat will continue to slow crop development this week, but it should be noted that helpful sunshine for soybean filling should occur, T-Storm Weather said.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Monday, tracking a tumble in the country's stock market. The benchmark May 2010 soybean contract settled RMB30 a metric tonne lower at RMB3,698 a tonne.

 

Large speculative traders now with long positions totaling 41,465 contracts combined CBOT soybean futures and options positions as of Aug. 25, down from 45,169 in the previous week, according to the Commodity Futures Trading Commission supplemental commitment-of-traders report. The data showed commercials were reported to hold net short combined futures and options positions totaling 152,023 contracts, and index funds holding net long positions of 147,099 contracts.