July 28, 2008

 

CBOT Soy Outlook on Monday: Up 10-15 cents on weather, stable outside markets

 

 

Soybean futures on the Chicago Board of Trade are expected to open Monday's day session firm, buoyed by weather concerns and stability in outside markets, traders said.

 

CBOT soybean futures are called 10 to 15 cents higher.

 

In overnight electronic trading, August soybeans were 12 1/2 cents higher at US$14.11 1/4 and November soybeans were 15 cents higher at US$14.01 1/2. December soyoil was 23 points lower at 60.22 cents per pound and December soymeal was US$9.00 higher at US$369.20 per short tonne.

 

The market is poised to climb in early action, taking its cue from the overnight theme, with hotter, drier longer-range forecasts enticing traders to add risk premium to prices, analysts said.

 

The market is trying to latch onto longer-range bullish weather forecasts amid the absence of fresh news, with consolidation from a sharp break in prices recently in commodities seen supporting prices, a CBOT floor analyst said.

 

Overall, the market looks as if it's taking a breather from its liquidation phase, with traders now looking ahead to weather conditions, as soybeans move closer to their critical growing month of August.

 

"When you have perfect weather as we have seen recently, it can't get more perfect, so when forecasts present some possible stressful conditions, the market will grab hold of the concern and add risk premium," said Vic Lespinasse, analyst with grainanalyst.com.

 

Nevertheless, near-term Midwest weather remains favorable, with DTN Meteorlogix forecasting episodes of scattered to widely scattered showers and thunderstorms during the next 24 to 48 hours in the western Midwest. Rainfall totals of 0.25 to 1.00 inch are expected.

 

In the eastern Midwest, episodes of scattered to widely scattered showers and thunderstorms are on tap through Wednesday. Dry conditions or just a few light showers are seen for Thursday through Sunday. Temperatures will average near to above normal with highs in the middle 80s to low 90s Fahrenheit.

 

A technical analyst said the next upside price objective for November soybeans is to push and close prices above psychological resistance at US$14.00 a bushel. The next downside price objective is pushing and closing prices below solid technical support at last week's low of US$13.56.

 

First resistance for November soybeans is seen at Friday's high of US$13.96 1/2 and then at US$14.00. First support is seen at US$13.75 and then at US$13.56.

 

Index funds trimmed their net long CBOT soybean futures and options positions combined, which now totals 150,109 contracts as of July 22, down from 160,284 the prior week, according to the CFTC, as reported Friday in its supplemental commitment of traders report. Traditional large speculative traders were net long 62,627 contracts compared with net longs of 81,026 in the previous week. Commercials held net short combined futures and options positions totaling 181,866 contracts, down from the previous week's 214,971 contracts.

 

The U.S. Department of Agriculture is scheduled to release its weekly export inspections report Monday at 11 a.m. EDT and its weekly crop progress report at 4 p.m. EDT.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Monday, tracking a rise on CBOT Friday and overnight. The benchmark January 2009 soybean contract settled RMB74 higher at RMB4,633 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange Monday ended with prices declining to their lowest level for the year on speculative selling and profit taking in the last few minutes of trading. The benchmark October contract on Bursa Malaysia Derivatives ended MYR69 lower at MYR3,001 a metric tonne.