September 11, 2006

 

CBOT Soy Outlook on Monday: Down 2-3 cents; in tune with overnight action

 

 

Soybean futures on the Chicago Board of Trade are seen starting Monday's session modestly lower, continuing the overnight theme, with positioning ahead of Tuesday's crop reported expected to be a featured attraction.

 

Soybeans are called to open 2 to 3 cents lower.

 

In e-CBOT trade, November soybeans were 2 3/4-cent lower at US$5.45 1/4 per bushel.

 

CBOT day session open auction and e-CBOT electronic trading platform opening will be delayed until 09:31 CDT, as the exchange observes a 1-minute of silence in memory of the 5-year anniversary of the 9/11 terrorist attacks on the U.S.

 

Weaker overnight prices will shape the opening calls, with the potential for choppy-two-sided action expected as traders avoid taking on added risk ahead of the U.S. Department of Agriculture's crop report Tuesday, analysts said.

 

However, the market remains under the influence of bearish fundamentals, with large crop outlooks and ample U.S. and world inventories expected to limit upside potential and keep defensive pressure in the market, said a CBOT commission house broker.

 

A technical analyst said the market has bearish near-term technical momentum, with the next downside price objective for November soybeans is technical support at US$5.25. It will take a close above technical resistance at US$5.70 to begin some fresh upside technical momentum.

 

First resistance for November soybeans is seen at US$5.55 1/2 - Friday's high - and then at US$5.60.

 

The DTN Meteorlogix forecast said rain and thunderstorms will move through the central areas of the U.S. Midwest crop belt Monday and in the eastern belt again Tuesday. Rainfall during this period is seen averaging 0.50-2.00 inches and locally heavier from eastern Iowa and eastern Missouri eastward. Mainly dry conditions are on tap for Wednesday. Temperatures will average below normal in the western belt and near-to-above normal in the eastern belt Monday, and below normal Tuesday.

 

Meanwhile, the average of analysts estimates taken from a survey compiled by Dow Jones Newswires for 2006-07 U.S. soybean production based on conditions as of Sept. 1 pegs the crop at 3.093 billion bushels. The estimates ranged from 2.994 billion bushels to 3.192 billion bushels. The 2005-06 ending stocks were pegged at 503 million bushels from estimates that ranged from 485 million to 523 million bushels. The average of estimates pegged 2006-07 ending stocks at 566 million bushels. The estimates ranged from 460 million to 696 million bushels.

 

USDA is scheduled to release its September production report at 7:30 a.m. CDT (1230 GMT) on Tuesday.

 

Commodity Futures Trading Commission on Friday reported large speculative traders were net short 45,224 combined soybean futures and options contracts as of Sept. 5, compared to net shorts of 45,247 in the previous week. Speculative funds were reported net long soyoil future and options to tune of 18,086 lots, down from 22,040 lots in the prior week. Large speculative traders were reported net short combined futures and options positions in soymeal by 39,076 lots compared to 43,553 contracts last week.

 

In deliveries, a total of 1,317 delivery notices were posted against the September soybean future. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was Sept. 8. 215 delivery notices recirculated against September soyoil. The last date trade assigned was Sept. 8. In soymeal, 81 delivery notices were posted against the September contract. The last trade date assigned was Sept. 5.

 

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

 

Rotterdam soybeans and soymeal were mostly lower. European vegoils were steady mostly flat.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly higher Monday, as demand is expected to increase with spot soyoil prices looking up, analysts said. The most active January 2007 contract settled RMB4 higher at RMB2,556 a metric tonne, after trading between RMB2,540/tonne and RMB2,570/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Monday, yielding to pressure from bearish supply and demand data and weak crude oil prices. The benchmark November CPO contract ended at MYR1,539 a metric tonne, down MYR14 from Friday.