September 25, 2006

  

CBOT Soy Outlook on Monday: Seen lower on improved harvest prospects

 

 

Soybean futures on the Chicago Board of Trade are expected to begin Monday's day session on the defensive, extending the overnight theme, with improved harvest prospects applying pressure.

 

In e-CBOT trade, November soybeans were 2 1/2 cents lower at US$5.46 3/4 per bushel. Soybean futures are called to open 2 to 3 cents lower.

 

The weather outlook for the U.S. Midwest has opened up harvest opportunities for the week, and traders anticipate seasonal pressures will weigh on prices as analysts look for cash sales to increase considering the large supply of old crop stocks on hand. 
 

It will be tough to mount any type of upward momentum with clearer weather outlooks, a CBOT floor analyst said. Reports of better than expected yields, spillover pressure from Friday and weakness in outside markets are expected to aide the lower theme as well, analysts added.

 

The DTN Meteorlogix weather forecast says harvest conditions should improve during the week, especially late in the week when it becomes warmer. Long range charts suggest a return to wetter weather next week, especially in the north.

 

Mainly dry conditions are on tap for Monday and most of Tuesday. There is a chance for sprinkles and light showers Tuesday night into early Wednesday. Mainly dry conditions are expected Thursday, in the western belt, with only a few light showers possible Friday. In the eastern belt, showers may linger Thursday, with mainly dry conditions expected Friday, Meteorlogix forecasts.

 

A market technician said it will take a close above technical resistance at the September high of US$5.63 in November soybeans to provide the market with some fresh upside technical momentum. The next downside price objective is closing November below solid support at the contract low of US$5.37 1/2.

 

First resistance for November soybeans is seen at US$5.55 and then at US$5.63. First support is seen at Friday's low of US$5.48 1/2 and then at last week's low of US$5.43.

 

In soymeal, the December contract would have to close above solid technical resistance at last week's high of US$169.50 to regain fresh upside technical momentum, the technician said.

 

First resistance comes in at US$166.50 and then at US$168.00. First support is seen at Friday's low of US$164.50 and then at US$162.50.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Monday. Spot cash soybean bids were down 5 cents in Cedar Rapids, Iowa, down 5 cents in Frankfort, Ind., and down 6 cents in St. Louis, Mo., according to cash sources Monday.

 

Commodity Futures Trading Commission on Friday reported large speculative traders were net short 49,478 combined soybean futures and options contracts as of Sept. 19, compared to net shorts of 49,964 in the previous week. Speculative funds were reported net long soyoil future and options to tune of 861 lots, down from 3,909 lots in the prior week. Large speculative traders were reported net short combined futures and options positions in soymeal by 35,568 lots compared to 47,891 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 and soymeal were mostly lower. European vegoils were flat to lower.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Monday amid oversupplied conditions. The benchmark January 2007 contract settled RMB17 lower at RMB2,535 a metric tonne, after trading between RMB2,530/tonne and RMB2,542/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply lower Monday as falling crude oil futures and surprisingly modest biodiesel production estimates weighed on market sentiment. The benchmark December contract ended down MYR39 at MYR1,506 a metric tonne.