October 23, 2006

 

CBOT Soy Outlook on Monday: Down 3-4 cents; lower e-CBOT, outside markets

 

 

Soybean futures at the Chicago Board of Trade are seen starting Monday's day session lower, in line with overnight action, with weakness in outside markets adding pressure.

 

Soybean futures are called to open 3 to 4 cents lower.

 

In e-CBOT trade, November soybeans were 4 cents lower at US$6.02 1/2 and January was 4 1/4-cents lower at US$6.16 per bushel.

 

A quiet news front is expected to keep technical considerations in play, with overbought conditions and weakness in outside markets generating downward pressure, analysts said.

 

Traders are eyeing underlying support levels that may trigger speculative fund selling, as participants square up a few positions ahead of month end, a CBOT broker said.

 

A technical analyst said market bulls still have upside technical momentum, but the market is a bit overdone on the upside, technically. The next upside price objective for January soybeans is to close prices above solid chart resistance at US$6.50. The next downside price objective is closing prices below solid support at US$6.00.

 

First resistance for January soybeans is seen at last week's high of US$6.27 1/2 and then at US$6.30. First support is seen at Friday's low of US$6.18 and then at US$6.15.

 

The DTN Meteorlogix weather forecast says the highest risk for further harvest delays is in Indiana and Ohio during the next 5 days, but there is some risk for harvest delays in the Illinois and Iowa area during the week.

 

Mainly dry conditions are on tap for Monday and Tuesday in the western Midwest, with a chance for showers developing Wednesday. Showers are possible Wednesday night into Thursday. Temperatures will average mostly below or much below normal during the next 5 days. In the eastern Midwest, mainly dry Monday, Tuesday and early Wednesday, with a chance for showers developing in the west later Wednesday or during Thursday. Temperatures will average mostly below normal during the next 5 days, Meteorlogix forecast.

 

Commodity Futures Trading Commission on Friday reported large speculative traders were net long 2,451 combined soybean futures and options contracts as of Oct. 17, compared with net shorts of 25,282 in the previous week. Speculative funds were reported net long soyoil futures and options to tune of 6,706 lots, compared with net shorts of 10,139 lots in the prior week. Large speculative traders were reported net short combined futures and options positions in soymeal by 934 lots, compared with 23,048 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.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Monday. Spot cash soybean bids were up 9 cents in Cedar Rapids, Iowa, up 15 cents in Evansville, Ind., and up 5 cents in St. Louis, Mo., according to cash sources Monday.

 

In demand news, the Kaohsiung branch of Taiwan's Breakfast Soybean Procurement Association, or BSPA, is seeking 27,000-60,000 metric tonnes of U.S. or Brazil-origin soybeans for November-December delivery in a tender to be concluded Wednesday, an association official said Monday.

 

Meanwhile, Brazil's Agriculture Ministry said in a press statement late Friday that it will auction 818,000 metric tonnes of soybeans from the new 2006-07 crop on Oct. 24. The auction is part of the government's budgeted 1 billion Brazilian real subsidy program for center-west and northern soy farmers announced in mid-2006.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Monday on a downward correction, analysts said. The benchmark January 2007 contract fell RMB16 to settle at RMB2,570 a metric tonne, after trading between RMB2,559 and RMB2,581/tonne.