June 9, 2008
CBOT Soy Outlook on Monday: Up 18-24 cents; midwest rains, floods spark gains
Soybean futures on the Chicago Board of Trade are seen starting Monday's day session firmly, bolstered by bullish Midwest weather conditions that threaten acreage and yield potential, analysts said.
CBOT soybean futures are called to start the session 18 to 24 cents higher. In overnight electronic trading, July soybeans were 20 3/4 cents higher at US$14.78 1/4 and November soybeans were 23 1/4 cents higher at US$14.62 3/4. July soyoil was 61 points higher at 64.95 cents per pound and July soymeal was US$5.00 higher at US$378.00 per short tonne.
The market is looking at a lot of rain that hit the Midwest during the weekend, raising concerns that flooded fields will need replanting or unseeded fields will be planted beyond the time frame for optimal yield potential, said Jack Scoville, analyst with Price Futures Group in Chicago.
The DTN Meteorlogix weather forecast said heavy storms and flooding hit parts of Indiana early in the weekend and then Iowa and Wisconsin later. Also, local areas in Nebraska, Illinois and Michigan had heavy storms and potential flooding. Planting, emergence and development of corn and soybeans will continue to be affected, Meteorlogix added.
The market is already faced with tight projected old and new crop ending stocks and any threat to production adds pressure for farmers to produce strong yields, analysts added.
Soybeans need strong yields and increased acreage to offset strong demand, but the weather raises doubts on acreage, as farmers begin to look at crop insurance payouts as they weigh the risks of late planting or replanting, said Vic Lespinasse, an analyst with Grainanalyst.com.
However, news of the suspension of the Argentine farmers' strike and declines in crude oil futures are expected to apply mild pressure to limit advances in nearby contracts, traders said.
Nevertheless, weather will trump outside influences and bolster futures to start the session, Lespinasse added.
A technical analyst said market bulls have gained solid upside near-term technical momentum recently and are looking for more on the upside in the near term. The next upside price objective for July soybeans is to push and close prices above psychological resistance at US$15.00 a bushel. The next downside price objective is pushing and closing prices below solid support at US$13.90.
First resistance for July soybeans is seen at Friday's high of US$14.87 3/4 and then at US$15.00. First support is seen at Friday's low of US$14.48 1/2 and then at US$14.15.
Argentina farmers will lift their blockade on grain export sales starting Monday, leaders of leading farm groups confirmed Saturday. On Friday, the farm groups issued a press release hinting at lifting the strike.
The committee has decided to "keep blocking the sale of grains for export until Sunday night, and from then we will remain in a state of alert and mobilization," the release said.
Index funds increased their net long CBOT soybean futures and options positions combined, which now total 164,325 contracts as of June 3, down from 165,530 the prior week, according to the Commodity Futures Trading Commission, as reported Friday in its supplemental commitment of traders report. Traditional large speculative traders were net long 90,556 contracts compared with net longs of 84,169 in the previous week. Commercials held net short combined futures and options positions totaling 216,965 contracts, up from the previous week's 215,377 contracts.
On tap for Monday, the U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11 a.m. EDT and its weekly crop progress report at 4 p.m. EDT.
In overseas markets, crude palm oil futures on Malaysia's derivatives exchange rose 2.8% Monday on strong support from soybean oil and crude, but ended off highs on a weak export outlook and expectations of higher inventories, said market participants. The benchmark August contract on the Bursa Malaysia Derivatives ended MYR60 higher at MYR3,660 a metric tonne.
