October 22, 2007

 

CBOT Soy Outlook on Monday: Down 18-20 cents; bearish outside Market influences

 

 

Soybean futures on the Chicago Board of Trade are seen starting Monday's day session on the defensive, continuing the overnight theme on broad based commodity weakness.

 

CBOT soybean futures are called to start the session 18 to 20 cents lower.

 

In overnight e-CBOT trading, November soybeans were 20 cents lower at US$9.63 1/4 per bushel, and January soybeans were 19 1/4 cents lower at US$9.82.

 

The market is poised to retreat in early action, as speculative traders shed some length on technical liquidation associated with commodity wide selling attributed to an overnight rebound in the U.S. dollar, analysts said.

 

The bearish influence of outside inflationary markets, with crude oil and metals futures stumbling lower is seen attracting speculative selling, analysts added.

 

Meanwhile, lower palm oil futures, favorable harvest conditions, improved planting conditions in Brazil as well as instability in equity markets are expected to aide the lower theme, traders said.

 

A technical analyst said market bulls still have the near-term technical advantage. The next upside price objective for January soybeans is to push and close prices above solid resistance at last week's high of US$10.15. The next downside price objective is closing prices below solid support at last week's low of US$9.86.

 

First resistance for January soybeans is seen at Friday's high of US$10.07 and then at US$10.15. First support is seen at Friday's low of US$9.94 1/2 and then at US$9.86.

 

The DTN Meteorlogix Weather Service forecast said showers and rain are seen from southern Iowa southward through central Missouri Monday and Tuesday. Mainly dry conditions are expected elsewhere in the region during this time. Dry conditions are expected across the region Wednesday.

 

In the eastern Midwest, there is a chance for showers and rain through southern and southeastern areas during the next 2-3 days. Dry conditions or with only a few light showers possible elsewhere in the region during this time, Meteorlogix added.

 

In Brazil, recent rainfall has helped improve soil moisture for planting early soybeans in Mato Grosso. Scattered thundershowers are possible again early this week, Meteorlogix.

 

The Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds held net long positions totaling 166,146 combined CBOT soybean futures and options contracts as of Oct. 16, up from 159,289 the prior week. Traditional large speculative traders were net long 114,687 contracts compared with net longs of 114,295 in the previous week. Commercials held net short combined futures and options positions totaling 242,458 contracts, up from the previous week's 231,092 contracts.

 

On tap for Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11:00 a.m. EDT and weekly crop progress reports at 4:00 p.m. EDT.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Monday on softer crude oil prices. The benchmark May 2008 soybean contract settled RMB48 lower at RMB4,227 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Monday after slowdown in exports and indications of a likely small rise in end-month inventories, market participants said. The benchmark January CPO contract on Bursa Malaysia Derivatives ended MYR51 lower at MYR2,714 a metric tonne, after touching an intraday low of MYR2,699/tonne.