September 15, 2008

 

CBOT Soy Outlook on Monday: Sharply lower; outside market forces weigh

 

 

Chicago Board of Trade soybean futures are poised for a sharply lower start to Monday's day session, pressured by outside financial-market woes.

 

CBOT soybean futures are called 30 to 35 cents lower.

 

In overnight electronic trading, November soybeans were 34 3/4 cents lower at US$11.67 1/4. December soybean oil was 136 points lower at 46.63 cents per pound and December soybean meal was US$7.40 lower at US$327.10 per short tonne.

 

The underlying support the market has from Friday's crop reports will be masked by outside macro-economic forces, with sharply lower crude-oil prices and strength in the U.S. dollar attracting speculative selling, said Don Roose, president of U.S. Commodities.

 

"There seems to be some flight to quality happening, with investors turning to the U.S. dollar and metals in the wake of financial issues with Lehman Brothers, Merrill Lynch and" American International Group, Roose added.

 

Traders are expected to keep a close eye on the opening in equity markets for a sense of market themes. Tight supplies, fears of lost yields in low-lying areas of the Midwest owing to weekend flooding and supportive crush data are seen providing underlying strength, but how far that will carry the market in the face of outside influences is a topic of debate early Monday, traders said.

 

A technical analyst said prices are still in a nine-week downtrend on the daily bar chart. The next upside price objective for November soybeans is to push and close prices above solid technical resistance at US$12.50 a bushel. The next downside price objective is pushing and closing prices below solid technical support at last week's low of US$11.57.

 

First resistance for November soybeans is seen at Friday's high of US$12.22 1/2 and then at US$12.50. First support is seen at Friday's low of US$11.78 and then at last week's low of US$11.57.

 

The DTN Meteorlogix weather forecast said heavy weekend rains, some more than 7 inches, may mean flooding of some fields in the region. However, this week looks drier and warmer and fields should slowly dry out. Higher temperatures this week will allow crops to continue to mature, Meteorlogix said.

 

In the Delta, rainfall associated with Hurricane Ike stayed west of major crop areas. Conditions for maturing crops and early harvests appear more favorable this week, Meteorlogix added.

 

The National Oilseed Processors Association says 121.681 million bushels of soybeans were crushed in August, down from 133.034 million in July and below the average analyst estimate of 132.1 million. The range of pre-report estimates was 130 million to 141 million. Soyoil stocks were pegged at 2.152 billion pounds, down from 2.367 billion, and below the average analyst estimate of 2.232 billion pounds. The range of estimates was 2.211 billion pounds to 2.267 billion pounds.

 

The U.S. Department of Agriculture is scheduled to release its weekly export inspections report Monday at 11 a.m. EDT, and its weekly crop progress report at 4 p.m. EDT. USDA will release its September forecasts for crop production and supply and demand Friday.

 

Traditional large speculative traders cut their net long positions in CBOT soybean futures and options combined contracts, which now total 23,169 contracts as of Sept. 9, compared with net longs of 41,747 in the previous week. Index funds trimmed their net long positions, which now total 135,592 contractsas of Sept. 9, down from 139,249 the prior week, according to the Commodity Futures Trading Commission, as reported Friday in its supplemental commitment of traders report. Commercials held net short combined futures and options positions totaling 126,631 contracts, down from the previous week's 150,937 contracts.