October 8, 2007

 

CBOT Soy Outlook on Monday: 4-6 cents lower on overnight weakness, rain

 

 

Chicago Board of Trade soybean futures are predicted to begin day session trading 4-to-6 cents lower Monday as lower prices in overnight trading and rainfall in dry areas of northern Brazil are expected to weigh on prices at the opening, analysts said.

 

In overnight e-CBOT trading, November soybeans fell 4 3/4 cents to US$9.35 3/4 per bushel, and January slid 6 cents to US$9.54. E-CBOT volume in November was 5,245 contracts.

 

The market was weaker overnight and it rained in northern Brazil which should pressure values at the start, a commission house analyst said. A few moderate showers were reported in northern Brazil over the weekend, but mostly hot and dry weather is expected over the next five days, DTN Meteorlogix Weather said.

 

Good harvest activity was noted in much of the U.S. Midwest over the weekend and will likely lead to hedge-related pressure, a trader said. In addition, the dollar is stronger and the outside markets weaker, which might contribute to a lack of buying interest, the trader said.

 

Interest in trading is expected to be light Monday with the financial markets and the U.S. Department of Agriculture closed due to the Columbus Day holiday, an analyst noted.

 

On daily technical charts, November soybeans closed solidly lower, near the session low and at a bearish weekly low close, a technical analyst said. Bulls are fading and need to watch out for a bear flag or bearish pennant pattern forming on the daily bar chart, the analyst said. The bulls' next upside price objective is closing prices above solid resistance at US$9.73, which is the bottom of a big downside price gap on the daily bar chart. The next downside objective is closing prices below solid support at last week's low of US$9.34 1/2.

 

First resistance for November soybeans is seen at US$9.50 and then at Friday's high of US$9.54 1/2. First support is seen at US$9.37 1/2, Friday's low, and then at US$9.34 1/2.

 

The Commodity Futures Trading Commission Friday reported in its supplemental commitment of traders report that traditional large speculative traders were net long 107,234 contracts compared with net longs of 113,799 in the previous week. Index funds were reported to hold net long positions totaling 159,336 combined soybean futures and options contracts as of Oct. 2, down from 159,857 the prior week. Commercials were reported to hold net short combined futures and options positions totaling 224,678 contracts, down from the previous week's 239,808 contracts.

 

In overseas markets, crude palm oil futures ended sharply lower on the Bursa Malaysia Derivative Exchange with the benchmark December contract down MYR28 at MYR2,542/tonne.

 

In other soybean news, China's National Grain and Oils Information Center said the country's 2007 soybean output is expected to total 14.4 million metric tonnes, unchanged from the forecast in September.

 

Soybean futures on China's Dalian Commodities Exchange tumbled lower after being closed last week for a holiday. The benchmark May 2008 contract settled RMB127 lower at RMB4,076 a metric tonne.

 

Due to Columbus Day the weekly export inspections and crop progress reports will be released Tuesday.