January 22, 2007

 

CBOT Soy Outlook on Monday: 5-7 cents down on weaker corn, overnight tone

 

 

Chicago Board of Trade soybean futures are expected to start Monday's day session weaker after declines overnight and with an absence of fresh bullish news to underpin prices, sources said.

 

Soybean futures are called to open 5 to 7 cents a bushel lower.

 

In e-cbot trade, March soybeans stumbled 6 3/4 cents lower to US$7.11.

 

CBOT corn futures also were lower overnight and spillover weakness may help to dictate an easier start for soybeans, analysts said. Soybean traders are keeping a close eye on activity in corn futures as the two markets will continue to battle for 2007 acreage, they added.

 

"That's predominantly where we have seen a lot of strength," Joe Victor of Allendale said about the corn market.

 

Soybeans might, however, find some support from ideas that growing conditions are becoming too wet in Brazil, CBOT floor sources noted.

 

The DTN Meteorlogix weather firm reported there are concerns that persistent wetness in some of Brazil's soybean areas could lead to increased soybean rust issues. Otherwise, conditions are mainly favorably, the firm noted.

 

"It is starting to become a growing concern, at least for us," Victor said about the wetness in Brazil.

 

CBOT March soybean prices Friday closed slightly higher and nearer the session low, but bulls are still in firm technical command after prices hit a fresh contract high last Thursday, a technical analyst added.

 

The next upside price objective for the soybean bulls is to close prices above solid longer-term resistance at the 2005 high of US$7.52 1/4, basis nearby futures, the analyst noted. The next downside price objective for the bears is closing prices below solid support at US$7.00.

 

First resistance for January soybeans is seen at Friday's high of US$7.23 and then at the contract high of US$7.28 1/2. First support is seen at US$7.13 1/2 and then at US$7.06.

 

"Look for higher volatility in the near term," the technical analyst advised.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Monday amid expectations of higher output in South America due to good weather. The most active September 2007 contract lost RMB13 to settle at RMB3,053 a metric tonne.

 

The weather in South America has been good recently, providing better conditions for soybean growth, according to an analyst in Shanghai.

 

Argentina's farmers have all but completed planting of the 2006-07 soybean crop with excellent weather fueling expectations for high yields, the Buenos Aires Cereals Exchange reported.

 

As of Friday, farmers had planted 98.9% of the forecast 16.1 million hectares of soybeans, up 1.6 points from the planting pace last year, according to the Exchange. Last week's rainfall combined with sunshine improved the already good condition of the crop, according to the Secretariat.

 

In other news, the Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds were reported to hold net long positions totaling 131,234 combined CBOT soybean futures and options contracts as of Jan. 16, up from 130,193 in the prior week. Traditional large speculative traders were net long 49,973 contracts.

 

Index funds are net long combined soyoil futures and options positions by 66,703 contracts, down from the previous week's 68,478 lots. Speculative funds were reported net long 38,346 lots.

 

Large speculative traders were reported net long combined futures and options positions in soymeal by 18,127 lots, compared with net longs of 7,645 contracts last week.

 

On tap for Monday, the U.S. Department of Agriculture is scheduled to release its weekly export inspection report at 11:00 a.m. EST.