September 18, 2006

 

CBOT Soy Outlook on Monday: Up 3-5 cents; e-CBOT; carryover tech buying

 

 

Soybean futures on the Chicago Board of Trade are poised to start Monday's day session activity on firm footing, following the overnight theme, as follow through buying from Friday underpins the market.

 

In e-CBOT trade, November soybeans were 4 1/2 cents higher at US$5.54 1/4 per bushel. Soybean futures are called to open 3 to 5 cents higher.

 

Friday's strong technical close, resulting in a weekly reversal coupled with an impetus on early harvest activity being delayed by cool, wet Midwest conditions, is expected to generate carryover buying interest, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

Uncertainty, with a forecasted cold snap in the Midwest, is seen adding to the supportive tonnee in the market, Roose adds.

 

Speculative short covering is expected to push upside movement as well, as weaker shorts head to the sidelines. Nevertheless, bearish supply side fundamentals are expected to continue to limit upside potential.

 

Friday's upside price action gave the market just a bit of fresh upside technical momentum heading into the new trading week, a technical analyst said. However, it will take a close above technical resistance at the September high of US$5.63 to provide some better upside technical momentum for November soybeans. The next major downside price objective for the contract is closing prices below solid support at last week's contract low of US$5.37 1/2.

 

First resistance for November soybeans is seen at US$5.55 - Friday's high - and then at US$5.63. First support is seen at US$5.42 3/4 - Friday's low - and then at US$5.37 1/2 - the contract low - and then at US$5.35.

 

The DTN Meteorlogix weather forecast says scattered thunderstorms are on tap for the southeastern and far eastern areas of the Midwest on Monday. A chance for sprinkles or light showers in the northwest part of the Midwest are expected, while mainly dry conditions are seen elsewhere in the region.

 

Mainly dry conditions are on tap during Tuesday and Wednesday. Temperatures will average well below normal in the western Midwest during this period, with the eastern Midwest turning much cooler during Tuesday and Wednesday. The lowest temperatures during this period should range from the 30s to the low 40s F. Frost and light freeze conditions are possible through northwest locations, Meteorlogix reports.

 

Commodity Futures Trading Commission on Friday reported large speculative traders were net short 49,964 combined soybean futures and options contracts as of Sept. 12, compared to net shorts of 45,224 in the previous week. Speculative funds were reported net long soyoil future and options to tune of 3,909 lots, down from 18,086 lots in the prior week. Large speculative traders were reported net short combined futures and options positions in soymeal by 47,891 lots compared to 39,076 contracts last week.

 

On tap for Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report 10:00 a.m. CDT and weekly crop progress report at 3:00 p.m. CDT.

 

Rotterdam soybeans were lower and soymeal was higher. European vegoils were mixed.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher on soybean futures gains on Chicago Board of Trading Friday, analysts said. The January 2007 contract settled RMB12 higher at RMB2,564 a metric tonne, after trading between RMB2,562/tonne and RMB2,568/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher after a range-bound, lackluster trading day Monday as the market paused for direction after recent sharp declines. The December contract ended at MYR1,550 a metric tonne, up MYR6 from Friday.