September 28, 2009

 

CBOT Soy Outlook on Monday: Lower on seasonal pressure, weather

 

 

Seasonal pressure and the absence of a weather threat to major Midwest growing areas have Chicago Board of Trade soybean futures poised for a lower start to Monday's day session.

 

CBOT soybean futures are seen starting 8 to 10 cents lower. In overnight action, Nov soybeans were 11 1/4 cents lower at US$9.14 3/4.

 

The market is seen tracking the lower overnight theme, with near term weather and the fall harvest getting ready to ramp up expected to apply a little pressure to prices, said Dax Wedemeyer, analyst with U.S. Commodities.

 

After frost free weather this week in the heart of the Midwest crop belt, the damage from a freeze becomes minimal, and with harvest pressure, potential rallies will be limited, he added.

 

The absence of definitive movement in outside financial markets means trader will pay close attention weather once again, treading the short side of the market, analysts said.

 

However, underlying demand and tight availability of near term supplies remains a supportive feature limit downside risks as well. Meanwhile, traders anticipate a subdued trading session with many participates absent from the market due to the Yom Kippur holiday.

 

A market technician said the next upside technical objective for soybeans is pushing and closing November prices above solid technical resistance at US$9.77 3/4 a bushel. The next downside price objective is pushing and closing prices below solid technical support at the September low of US$8.92 a bushel.

 

First resistance for November soybeans is seen at Friday's high of US$9.31 3/4 and then at US$9.40. First support is seen at US$9.09 1/4 and then at last week's low of US$9.02.

 

The DTN Meteorlogix weather forecast said the lowest temperatures Monday night and early Tuesday may fall into the low to middle 30s Fahrenheit in the eastern Dakota's north and west-central Minnesota with some risk of frost. This should not cause any significant damage to corn or soybeans in the area. Other than this area there are no significant concerns for frost or freeze during the next 10 days, Meteorlogix said.

 

However, cool and wet conditions this week may be unfavorable for maturing crops and harvests...especially in the western Midwest region.

 

In the Delta, the region should turn drier until a cold front moves in later in the week. Conditions should slowly improve after recent heavy rains for the maturing crops and crop harvests, Meteorlogix said.

 

The U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11 a.m. EDT and its weekly crop progress report at 4 p.m. EDT.

 

In overseas markets, soybean futures fell on the Dalian Commodity Exchange Monday along with the wider equity and commodity markets, as traders took profit ahead of the long holidays. The benchmark May 2010 soybean contract settled 1.4% lower at RMB3,574 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended sharply lower Monday, erasing last week's gains as investors booked profits. The benchmark December CPO contract on the Bursa Malaysia Derivatives ended MYR83 lower at MYR2,103 a metric tonne.