August 7, 2006

  

CBOT Soy Outlook on Monday: Down 7-10 cents; non-threatening Midwest weather

  

 

Soybean futures on the Chicago Board of Trade are seen starting the week on the defensive, pressured by a less threatening weather conditions for Midwest crops heading through their critical growth stages.

 

Soybeans are called to open 7 to 10 cents lower.

 

In e-CBOT trade, November soybeans were 9 cents lower at US$5.88 per bushel.

 

The market is poised to open lower on more seasonal temperatures for the Midwest this week and potential rains, said Jason Roose, analyst with U.S. Commodities. The market also is respecting big carryout projections ahead of Friday's key crop reports, he added.

 

Technically inspired selling is expected to add to the lower tone, as futures stumbled below meaningful support levels in overnight action, analysts said. Speculative funds are net short the market, and without any crop threats this week, futures are targeting downside technical objectives, traders said.

 

Meanwhile, market technicians said there is a strong technical support zone located between US$5.85 and US$5.92, basis November futures. The next downside price objective for the contract is closing prices below solid support at the June low of US$5.91. It will take a close above technical resistance at US$6.10 to provide fresh upside technical momentum.

 

First resistance for November soybeans is seen at US$6.01 - Friday's high - and then at US$6.05. First support is seen at US$5.94 - Friday's low - and then at US$5.91.

 

The DTN Meteorlogix forecast said scattered showers and thundershowers will move from southern Iowa southward into Missouri Monday into tonight before mainly dry conditions emerge Tuesday and most of Wednesday in the western Midwest. In the eastern Midwest, there is a chance for scattered to widely scattered thundershowers during Monday into Tuesday, with mainly dry conditions expected Wednesday, Meteorlogix forecasts.

 

Meanwhile, mostly above normal temperatures and below normal rainfall is on tap during the next 7-10 days in both the western and eastern Midwest, Meteologix added.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Monday. Spot cash soybean bids were up 1 cent in Keokuk, Iowa, down 4 1/2 cents in Peoria, Ill., and up 1 cent in St. Louis, Mo., according to cash sources Monday.

 

In deliveries, a total of 1,343 delivery notices recirculated against the August soybean future. The last trade date assigned was Aug. 4. Some 470 delivery notices recirculated against the August soymeal contract. The trade date assigned was Aug. 4.

 

The Commodity Futures Trading Commission said Friday in its commitments of traders report that large speculative traders held net short futures and options positions totaling 35,122 lots in soybeans as of Aug. 1, compared with the previous week's net shorts of 14,751 lots. In soyoil, large specs held net long positions of 66,566 compared with 68,209 lots in the previous week. Large specs held net short positions of 35,104 in soymeal, up from net shorts of 25,170 lots reported in the previous week.

 

On tap for Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 10 a.m. CDT and its weekly crop progress report at 3 p.m. CDT.

 

Rotterdam soybeans and soymeal prices were mostly higher. European vegoils were mostly lower.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Monday, as weather forecasts gave no firm indication of whether a drought may hit major soybean-producing regions in the U.S. The benchmark September contract settled RMB8 lower at RMB2,408/tonne, after trading between RMB2,401/tonne and RMB2,415/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended moderately higher Monday, boosted by a sharp rise in crude oil. The benchmark October contract ended at MYR1,618 a metric tonne, up MYR7 from Friday.