August 4, 2008

 

CBOT Soy Outlook on Monday: Down sharp; weather, outside market influences

 

 

Chicago Board of Trade soybean futures are expected to open sharply lower Monday, continuing the overnight theme on bearish weather and outside market influences.

 

CBOT soybean futures are called 20 to 25 cents lower.

 

In overnight electronic trading, August soybeans were 26 cents lower at US$13.31 3/4 and November soybeans were 25 3/4 cents lower at US$13.39 1/4. December soyoil was 106 points lower at 56.75 cents per pound and December soymeal was US$6.50 lower at US$359.50 per short tonne.

 

Weather conditions for Midwest crops remain favorable with cooler, wet 6- to 10-day outlooks following a brief round of heat, is seen keeping prices on the defensive, analysts said.

 

Outside influences are adding to the losses, with lower crude oil, gold and silver futures generating broad based commodity selling in early action. Overnight declines in Asian soy and vegoil markets should weigh on prices also, analysts added.

 

Meanwhile, technical pressure is seen aiding the lower tone. Carryover selling from Friday's close, and the ability of the active November future to break out of a sideways trading range down through support in the US$13.50 area is expected to attract speculative sellers as well, traders said.

 

A technical analyst said prices are in a four-week-old downtrend on the daily bar chart. 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 the July low of US$13.51 3/4.

 

First resistance for November soybeans is seen at US$13.80 and then at US$14.00. First support is seen at Friday's low of US$13.62 3/4 and then at US$13.51.

 

The DTN Meteorlogix weather forecast hot Midwest temperatures early this week should last only a couple of days, giving way to cooler and wet conditions. Meteorlogix said there remains no significant concern for flowering soybeans in the region.

 

In the U.S. Delta, above to much above normal temperatures and below normal rainfall will continue to stress developing soybeans for at least the next few days. After that it looks cooler with at least some light shower activity, Meteorlogix added.

 

Index funds trimmed their net long CBOT soybean futures and options positions combined, which now totals 148,734 contracts as of July 29, down from 150,109 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 54,618 contracts compared with net longs of 62,627 in the previous week. Commercials held net short combined futures and options positions totaling 175,397 contracts, down from the previous week's 181,866 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 deliveries, August soybean deliveries totaled 6 lots. Issuers and stoppers were scattered among commission houses. The last trade date assigned was June 27.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange tumbled Monday amid concerns over policy controls during the coming Olympic Games. The benchmark January 2009 soybean contract settled RMB160 or 3.6% lower at RMB4,242 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended at a fresh closing low for 2008 Monday on fresh selling pressure from hedgers after physical buyers defaulted on contracts finalized earlier at higher prices. The benchmark October contract on Bursa Malaysia Derivatives ended MYR60 lower at MYR2,890 a metric tonne.