December 18, 2006

 

CBOT Soy Outlook on Monday: Seen down 4-5 cents; following e-CBOT trend

 

 

Chicago Board of Trade soybean futures are poised to open lower Monday, following the overnight trend amid an absence of fresh supportive news.

 

Soybean futures are called to open 4 to 5 cents lower.

 

In e-CBOT trade, January soybeans were 4 3/4 cents lower at US$6.52 3/4 and March was 5 cents lower at US$6.67 1/4 per bushel.

 

The lack of fresh fundamental news to direct prices is expected to produce some consolidative trade, with a technical correction into the end of the year a possibility as futures await fresh directives, analysts said.

 

Favorable South American crop weather and lower price movement in Asian markets coupled with declines in outside markets are seen aiding the defensive theme, traders added.

 

Meanwhile, higher-than-expected fund lengths have traders leery of further long liquidation, while solid underlying demand and signs the market has settled into a comfortable trading range is seen maintaining a sideways theme, a CBOT floor analyst said.

 

A market technician said soybean futures have some fresh technical momentum heading into the new trading week. The next downside price objective for the January future is closing prices below solid support at the mid-November reaction low of US$6.51 1/2. The next upside price objective is to close prices above solid resistance at US$6.75 3/4 a bushel.

 

First resistance for January soybeans is seen at Friday's high of US$6.62 1/4 and then at US$6.67. First support is seen at Friday's low of US$6.54 1/4 and then at US$6.51 1/2.

 

The DTN Meteorlogix weather forecast said heavy storms during the weekend across Argentina's crop belt will maintain soil moisture for crops but there may have been some flooding with these storms. Meanwhile, increasing rain activity in Brazil this week will help to ease stress to soybeans through the southern belt, Meteorlogix said.

 

The Commodity Futures Trading Commission on Friday reported large speculative traders were net long 51,188 combined soybean futures and options contracts as of Dec. 12, compared with net longs of 45,057 in the previous week. Speculative funds were reported net long soyoil futures and options to the tune of 62,192 lots, compared with net longs of 62,377 lots in the prior week. Large speculative traders were reported net long combined futures and options positions in soymeal by 16,258 lots, compared with net longs of 15,412 contracts last week.

 

On tap for Monday, the USDA is scheduled to release its weekly export inspection report 10:00 a.m. CST.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Monday. Spot cash soybean bids were up 4 cents in Keokuk, Iowa, up 2 cents in Peoria, Ill., and up 5 cents at St. Louis, according to cash sources Monday.

 

Rotterdam soybeans were lower and soymeal was flat to lower. European vegoils were flat to lower.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Monday, pressured by Friday's losses in CBOT soybean futures, said analysts. The benchmark May 2007 contract settled RMB20 lower at RMB2,815 a metric tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Monday dragged down by losses in soyoil futures and weak market sentiment amid recent poor demand. The benchmark March contract ended at MYR1,847 a metric tonne, down MYR17/tonne.