October 9, 2006

  

CBOT Soy Outlook on Monday: Up 1-2 cents; borrowed strength from wheat

 

 

Soybean futures on the Chicago Board of Trade are seen starting Monday's day session on firm footing, feeding off spillover support from wheat futures and strength in outside markets.

 

Soybean futures are called to open 1- to 2-cents higher.

 

In e-CBOT trade, November soybeans were 1-cent higher at US$5.65 per bushel.

 

The market is set to follow wheat higher, with strength in outside inflationary markets lending support, analysts said. CBOT wheat futures were 20 cents higher in overnight action.

 

The market will take on the role of as a follower in the absence of fresh market moving features, traders added.

 

A quiet news front will keep futures searching for direction, but any sign of upside exhaustion may attract speculative selling as bearish supply side fundamentals remain hindrances to any all out push to higher levels, a CBOT commission house broker said.

 

A technical analyst said the market has upside technical momentum following recent price action, and technical odds are now high that a harvest low is in place. It will take a close above technical resistance at US$5.75 basis November futures to provide better upside momentum, with the next downside price objective is closing prices below solid support at US$5.55.

 

First resistance for November soybeans is seen at US$5.67 and then at Friday's high of US$5.70. First support is seen at Friday's low of US$5.62 3/4 and then at US$5.60.

 

Meanwhile, futures may draw some mild support from potential harvest slow downs in the Midwest this week, as cooler and wet conditions limit some field operations, traders say.

 

The DTN Meteorlogix weather forecast says colder, wetter weather during the week will cause some harvest delays in the U.S. Midwest, but this doesn't appear to be the start or a wet pattern. The western Midwest has a chance for a few light showers Monday, mainly in western locations, with a chance for scattered showers through southern areas of the region Tuesday into Wednesday. The northern areas will see only a few light showers Tuesday and possible snow showers Wednesday. Temperatures will average below normal Monday and Tuesday, and well below normal Wednesday, Meteorlogix reports.

 

In the eastern Midwest, dry conditions or possibly a few light showers are possible Monday and most of Tuesday. Light to moderate showers, are seen for Tuesday night or Wednesday. Temperatures will average below normal in northwestern areas but above normal elsewhere Monday. Tuesday brings below normal temperatures Tuesday and Wednesday, Meteorlogix forecasts.

 

In deliveries, a total of 108 delivery notices were posted against the October soyoil future. A customer account at RJ O'Brien issued all the notices with a customer account at Tenco stopping all the notices. The last trade date assigned was Sept. 26.

 

Commodity Futures Trading Commission on Friday reported large speculative traders were net short 48,737 combined soybean futures and options contracts as of Oct. 3, compared to net shorts of 50,016 in the previous week. Speculative funds were reported net short soyoil futures and options to tune of 16,932 lots, compared to 8,473 lots in the prior week. Large speculative traders were reported net short combined futures and options positions in soymeal by 32,871 lots compared to 32,463 contracts last week.

 

The U.S. Department of Agriculture's weekly export inspection and crop progress reports, normally released on Monday, will be postponed until Tuesday due to the Columbus Day holiday.

 

Rotterdam soybeans and soymeal were lower. European vegoils were mixed.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Monday on concerns that the local harvest in October will pressure prices. The benchmark January 2007 contract settled RMB5 lower at RMB2,539 a metric tonne, after trading between RMB2,528/tonne and RMB2,554/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly higher Monday on gains in crude oil futures. The benchmark December contract ended at MYR1,554 a metric tonne, up MYR12.