July 23, 2007

 

CBOT Soy Outlook on Monday: Down 9-11 cents; less threatening Midwest weather

 

 

Chicago Board of Trade soybean futures are seen starting Monday's day session lower, as less threatening Midwest weather entices traders to trim risk premium from prices, analysts said.

 

CBOT soybean futures are called to start the session 9 to 11 cents lower.

 

In overnight e-CBOT trading, August soybeans were 10 3/4 cents lower at US$8.39 1/2 per bushel, and November was 9 3/4 cents lower at US$8.65 1/2.

 

The market is chasing the latest weather forecast and with private forecasters calling for increased chances of rain and less threatening temperatures in the Midwest this week, futures are poised to drift lower, analysts said.

 

Prices look to start on the defensive, but midday weather outlooks will be eyed, as tightening projected 2007-08 stocks and the need to attract additional acres next year will keep traders on guard for any shifts in weather outlooks that may threaten this year's crop, a CBOT floor analyst added.

 

A technical analyst said serious near-term chart damage has been inflicted in soybeans recently to still suggest a major market top is in place. The daily chart shows a bear flag has developed recently. The next upside price objective for November soybeans is closing prices above solid technical resistance at US$8.93. The next downside price objective is closing prices below solid support at last week's low of US$8.55 1/2.

 

First resistance for November soybeans is seen at US$8.80 and then at US$8.93. First support is seen at Friday's low of US$8.69 1/2 and then at US$8.60.

 

The DTN Meteorlogix Weather Service forecast added rain into the forecast for the Midwest region and cooled off the temperatures for this coming Thursday and Friday.

 

The western Midwest has a chance for scattered thundershowers through eastern and southern Iowa and northern Missouri Monday and Tuesday. Isolated thundershowers elsewhere in the region are seen in this time. Dry conditions or with only a few more isolated thundershowers in the south are seen for Wednesday. Temperatures will average below normal east and south during this period, and near to above normal northwest. Scattered showers and possible thundershowers are on tap for Thursday into Friday, with temperatures turning cooler during this period.

 

In the eastern Midwest, dry conditions or with only a few showers in far west areas are seen for Monday and Tuesday. A chance for scattered showers through the Ohio River valley is seen for Wednesday, mainly dry elsewhere in the region. Temperatures will average near to mostly below normal. There is a chance for scattered to widely scattered showers and thunderstorms Thursday and Friday. Temperatures will average near to above normal Thursday and near normal Friday, Meteorlogix reports.

 

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 154,595 combined soybean futures and options contracts as of July 17, up from 149,863 the prior week.

 

Traditional large speculative traders were net long 108,762 contracts compared with net longs of 118,757 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 240,469 contracts, down from the previous week's 248,854 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 (1500 GMT) and weekly crop progress reports at 4:00 p.m. EDT.

 

In overseas markets, crude palm oil futures on Malaysia's derivatives exchange ended lower Monday, dragged down by declines in the soy market amid bearish weather conditions. The benchmark October contract on the Bursa Malaysia Derivatives ended at MYR2,480 a metric tonne, down MYR26 from Friday.

 

On Singapore's Joint Asian Derivatives Exchange, trading activity in CPO futures was lackluster with only 1 lot traded for October at US$735.25/tonne, up US$2 from Friday.

 

Soybean futures traded on the Dalian Commodity Exchange settled mostly lower Monday, following declines at CBOT Friday. The benchmark January 2008 soybean contract settled RMB11 lower at RMB3,298 a metric tonne.

 

In other news, Chinese traders may have canceled up to four soybean shipments booked in earlier months last week, according to a report by commodities analysis firm Shanghai JCI Monday. The report said the cancellations come amid still-high CBOT soybean futures and low demand for soymeal in China.