July 14, 2008

 

CBOT Soy Outlook on Monday: Down 35-38 cents, midwest weather dominant factor

 

 

Soybean futures on the Chicago Board of Trade are poised for a lower start to Monday's day session, pressured by Midwest weather and overnight market influences.

 

CBOT soybean futures are called 35 to 38 cents lower.

 

In overnight electronic trading, July soybeans were 37 1/2 cents lower at US$15.93 and November soybeans were 37 1/4 cents lower at US$15.58 3/4. December soyoil was 97 points lower at 65.05 cents per pound and December soymeal was US$12.10 lower at US$416.00 per short tonne.

 

The forecast for the U.S. Midwest soybean belt looks favorable for crop development, with a lack of threatening weather enticing traders to extract some risk premium from prices, analysts said.

 

The overnight theme is expected to lend pressure to prices as well, but a recovery from losses overnight in outside crude oil and metal futures early Monday is seen limiting some losses, analysts added.

 

Nevertheless, weather remains the dominant factor influencing prices, with moderate temperatures and consistent precipitation seen improving crop conditions. However, a tight supply and demand scenario remains in place, and any bearish momentum is seen short term, a trader added.

 

A technical analyst said the next upside price objective for November soybeans is to push and close prices above solid resistance at the contract high of US$16.36 3/4 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$15.00.

 

First resistance for November soybeans is seen at US$16.00 and then at Friday's high of US$16.20. First support is seen at US$15.75 and then at Friday's low of US$15.61.

 

The DTN Meteorlogix Weather forecasts said some hot weather is expected to enter the Midwest region from the west during this week. However, it is not expected to continue long enough to have a significant impact on crops. Weekend rains may have caused some flooding of fields in east-central Illinois areas.

 

The National Oilseed Processors Association says 133.5 million bushels of soybeans were crushed in June, down from 144 million in May and below the average analyst estimate of 136.9 million. The range of pre-report estimates was 134 million to 138.6 million. Soyoil stocks were pegged at 2.449 billion bushels, down from 2.489 billion, but above the average analyst estimate of 2.424 billion. The range of estimates was 2.367 billion pounds to 2.480 billion pounds.

 

Index funds trimmed their net long CBOT soybean futures and options positions combined, which now totals 165,205 contracts as of July 8, down from 168,957 the prior week, according to the CFTC, as reported Friday in its supplemental commitment of traders report. Traditional large speculative traders were net long 81,784 contracts compared with net longs of 92,790 in the previous week. Commercials held net short combined futures and options positions totaling 221,604 contracts, up from the previous week's 238,264 contracts.

 

On tap for Monday, 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, China's soybean futures traded on the Dalian Commodity Exchange settled lower Monday amid a sluggish demand for soybean oil. The benchmark January 2009 soybean contract settled RMB60 lower at RMB4,941 a metric tonne, or down 1.2%, after trading in the RMB4,923-RMB4,972/tonne range.

 

Crude palm oil futures on Malaysia's derivatives exchange fell 1.43% Monday as the likelihood of poor export numbers damped sentiment and on spillover weakness from soyoil prices, said trade participants. The benchmark September contract on Bursa Malaysia Derivatives ended MYR51 lower at MYR3,524/tonne, close to an intraday low of MYR3,515.
   

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