October 5, 2009

 

CBOT Soy Outlook on Monday: Lower, follow through selling, big crop

 

 

Chicago Board of Trade soybean futures are poised for a lower start to Monday's day session, under pressure from carryover selling from Friday and bearish crop outlooks.

 

CBOT soybean futures are seen starting 2 to 4 cents lower. In overnight action, Nov soybeans were 4 1/4 cents lower at US$8.80 3/4.

 

Follow through selling from Friday's poor technical close sets the stage for declines in the absence of fresh supportive news, with fears of higher production and yield estimates in Friday's crop reports weighing on the market, said Don Roose, president U.S. Commodities.

 

"Early harvest results continue to report lofty yields, providing a negative slant for Friday's report," said Roose.

 

Meanwhile, a quiet news front, with the absence of China in the market this week coupled with weakness in crude oil futures adds to the defensive theme.

 

"The rise in soybean open interest on a sharply lower day Friday argues of fresh short selling," according to a market note from AgResource Co.

 

Preliminary data from CME Group said open interest in CBOT soybeans rose by 7,759 contracts Friday.

 

However, traders said despite the bearish tone in the market, harvest delays in the Delta and tight availability of nearby cash supplies continue to provide underlying support.

 

A technical analyst said first resistance for November soybeans is seen at US$9.00 and then at Friday's high of US$9.18. First support is seen at the July low of US$8.81 1/4 and then at US$8.75.

 

The DTN Meteorlogix weather forecast said cool, unsettled weather this week will be unfavorable for the maturation and harvesting of corn and soybeans. There is potential for the first widespread freeze of the season in significant portions of the Midwest later in the week. A cold and drier weather pattern expected during the 6-10 day period.

 

In the Delta, rain returned to the region during the weekend, with maybe more rain seen during the week, 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. USDA will release its crop production and supply/demand reports Friday 8:30 am EDT.

 

In overseas markets, crude palm oil futures on Malaysia's derivatives exchange ended little changed in choppy trade Monday, unable to sustain early gains due to a slight easing in demand in the cash market and to liquidation of speculative long positions, trade participants said. The benchmark December contract on Bursa Malaysia Derivatives ended MYR5 higher at MYR2,042 a metric tonne.

 

China's soybean, soymeal, soyoil, futures traded on the Dalian Commodity Exchange was closed overnight, as the exchange was closed for the National Day and Mid-Autumn Festival holidays through Friday.