October 2, 2006

 

CBOT Soy Outlook on Monday: Up 3-5 cents, e-CBOT, spillover wheat, corn

 

 

Soybean futures on the Chicago Board of Trade are seen starting Monday's day session higher, following the overnight theme, with spillover strength from corn and wheat providing price support.

 

Soybean futures are called to open 3 to 5 cents higher.

 

In e-CBOT trade, November soybeans were 5 1/2 cents higher at US$5.53 per bushel.

 

The strength of overnight prices is serving as supportive opening indicators, as strength from neighboring grain futures generate some buying interest amid a lack of any significant fundamental news, said a CBOT floor analyst.

 

Traders expect futures to follow the lead of wheat and corn to start the day, but upside potential will remain limited as harvest related pressures cap rallies. Technical buying may aid the market's gains if futures can challenge last week's highs, but weather outlooks projecting favorable conditions for combining in the Midwest remain a hindrance to significant buying potential, analysts said.

 

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 prices below solid support at the contract low of US$5.37 1/2.

 

First resistance for November soybeans is seen at US$5.50 and then at US$5.55. First support is seen at Friday's low of US$5.45 1/2 and then at US$5.40.

 

The DTN Meteorlogix weather forecast says there are no significant harvest concerns for the next 5-7 days in the US Midwest. There is some risk for wetter weather returning during days 8-10.

 

In the western Midwest, dry conditions with only isolated light showers are seen for Monday, with scattered light showers possible Tuesday into Tuesday night. Mainly dry conditions are in store for Wednesday. Temperatures will average well above normal Monday, above to well above normal Tuesday, and near to above normal Wednesday, Meteorlogix forecasts. In the eastern belt, a few thundershowers are possible in northeast areas Monday, while the rest of the region stays dry. Scattered showers and thundershowers are possible through northern and eastern areas Tuesday or early Wednesday, with temperatures averaging above or well above normal during this period, Meteorlogix reports.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Monday. Spot cash soybean bids were down 3 cents in Keokuk, Iowa, down 9 cents in Quincy, Ill., and down 9 cents in Evansville, Ind., according to cash sources Monday.

 

In deliveries, a total of 325 delivery notices were posted against October soyoil futures. A customer account at JP Morgan was the principle issuer with 276 lots, while the primary stopper was a customer account at RJ O'Brien with 323 lots. The last trade date assigned was September 13.

 

Commodity Futures Trading Commission on Friday reported large speculative traders were net short 50,016 combined soybean futures and options contracts as of Sept. 26, compared to net shorts of 49,478 in the previous week. Speculative funds were reported net short soyoil future and options to tune of 8,473 lots, compared to a net long position of 861 lots in the prior week. Large speculative traders were reported net short combined futures and options positions in soymeal by 32,463 lots compared to 35,568 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 mixed.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended slightly lower in choppy, speculative trade Monday on a lack of fresh fundamental leads. The benchmark December contract ended down MYR1 at MYR1,558 a metric tonne.