October 16, 2006

 

CBOT Soy Outlook on Monday: Down 1-2 cents; e-CBOT, setback from recent gains

 

 

Soybean futures on the Chicago Board of Trade are seen starting the week modestly lower, following the overnight theme, setting back after the previous week's strong gains.

 

Soybean futures are called to open 1 to 2 cents lower.

 

In e-CBOT trade, November soybeans were 1 3/4-cent lower at US$5.89 3/4 and January was 2 cents lower at US$6.03 1/2 per bushel.

 

A quiet news front coupled with seasonal pressures and ideas that recent gains were a bit overdone are expected to attract some profit-taking weakness in early action, traders said.

 

However, solid underlying domestic and export demand are expected to generate underlying support while traders remain on guard for speculative buying to re-emerge on spillover strength from higher opening calls for volatile wheat futures, a commission house broker added.

 

A market technician said soybean futures have gained solid near-term upside technical power, but the market is now short-term overbought, technically. The next upside price objective for November soybeans is closing prices above psychological resistance at US$6 a bushel. The next downside price objective is closing prices below solid support at US$5.70.

 

First resistance for November soybeans is seen at Friday's high of US$5.94 1/2 and then at US$6. First support is seen at Friday's low of US$5.84 1/2 and then at US$5.80.

 

The DTN Meteorlogix weather forecast said the western Midwest has a chance for sprinkles or light showers Monday and Tuesday, with some light rain or mixed snow Wednesday. Temperatures will average near to below normal Monday, below normal Tuesday, well below normal Wednesday.

 

In the eastern Midwest, moderate rain of 0.25-1.00 inch is on tap through southeast Missouri and the Ohio river valley for Monday into early Tuesday. The balance of the region should see only light showers during this time, favoring the south and east. Mainly dry conditions or only a few light showers are in store through northwest locations of the region for Wednesday, Meteorlogix reports. Temperatures will average near to below normal Monday and Tuesday, and near to above normal Wednesday.

 

The National Oilseed Processors Associated reported its members crushed 137.3 million bushels of soybeans during September. The figure was more than the average trade estimate of 133 million bushels and more than the 134.6 million NOPA reported for the month of August. Estimates for the report ranged from as low as 129 million bushels to as high as 138 million bushels. Soyoil stocks declined to 2.63 billion pounds, down from 2.678 billion in August. The average of trade estimates projected stocks at 2.676 billion pounds.

 

Commodity Futures Trading Commission on Friday reported large speculative traders were net short 25,282 combined soybean futures and options contracts as of Oct. 10, compared with net shorts of 48,737 in the previous week. Speculative funds were reported net short soyoil futures and options to tune of 10,139 lots, compared with 16,932 lots in the prior week. Large speculative traders were reported net short combined futures and options positions in soymeal by 23,048 lots, compared with 32,871 contracts last week.

 

On tap for Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspection 10 a.m. CDT and crop progress reports at 3:00 p.m. CDT.

 

Rotterdam soybeans and soymeal were higher. European vegetable oils were mostly higher.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly higher Monday, tracking gains in Chicago Board of Trade soybean futures Friday. The benchmark January 2007 contract gained RMB19 to settle at RMB2,572 a metric tonne, after trading between RMB2,555/tonne and RMB2,583/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended mixed Monday, as the market's failure to surpass a major psychological resistance spurred late profit-taking to erode earlier gains, traders said. The January CPO contract, which began trading as the benchmark, ended MYR1 lower at MYR1,590 a metric tonne.