August 11, 2008


CBOT Soy Outlook on Monday: Up 3-5 cents; consolidating after steep losses



Soybean futures on the Chicago Board of Trade are expected to start Monday's day session higher, consolidating after last week's sharp declines, with supportive outside market influences underpinning prices, analysts said.


CBOT soybean futures are called 3 to 5 cents higher.


In overnight electronic trading, August soybeans were 5 cents higher at US$12.04 and November soybeans were 4 3/4 cents higher at US$11.85 1/4. December soyoil was 2 points higher at 51.52 cents per pound and December soymeal was US$1.90 higher at US$315.20 per short tonne.


Futures are poised for a modest bounce, stabilizing on short covering amid oversold conditions ahead of Tuesday's crop reports, with a firmer tone in outside energy markets and a weaker U.S. dollar aiding the advances, a CBOT floor analyst said.


The market has incurred some steep losses in recent weeks, but with the uncertainty of yields, acreage and production estimates from the U.S. Department of Agriculture Tuesday, you have to expect some position evening, he added.


Nevertheless, bearish weather conditions for developing crops, with the absence of any near-term crop threats a hindrance to upside potential, initial gains are seen limited, analysts said.


A technical analyst said market bears have the solid near-term technical advantage. The next upside price objective for November soybeans is to push and close prices above psychological resistance at US$12.00 a bushel. The next downside price objective is pushing and closing prices below solid technical support at the May low of US$11.64 3/4.


First resistance for November soybeans is seen at US$12.00 and then at US$12.25. First support is seen at Friday's low of US$11.73 1/2 and then at US$11.68.


The DTN Meteorlogix weather forecast calls for near- to below-normal temperatures and near- to above-normal rainfall during the next seven to 10 days in the U.S. Midwest. The conditions are seen as favorable for flowering and pod filling soybeans.


In the U.S. Delta, an improving rainfall pattern will ease stress to developing soybeans, Meteorlogix forecast.


Looking ahead, the USDA is scheduled to release its August crop report Tuesday 8:30 a.m. EDT. The average of analysts estimates projects a crop size of 3.003 billion bushels with a yield of 41.6 bushels per acre. The averages ranged from 2.957 billion to 3.100 billion bushels for production and 40.7 to 42.5 bushels per acre for yields. The USDA currently pegs the crop at 3.000 billion bushels using a trend-line yield of 41.6 bushels an acre.


The USDA is also 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.


Index funds trimmed their net long CBOT soybean futures and options positions combined, which now totals 149,100 contracts as of Aug. 5, up from 148,734 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 50,479 contracts compared with net longs of 54,618 in the previous week. Commercials held net short combined futures and options positions totaling 165,275 contracts, down from the previous week's 175,397 contracts.


In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled sharply lower Monday, tracking a tumble at the CBOT Friday. The benchmark January 2009 soybean contract settled RMB171 lower at RMB3,928 a metric tonne.


Crude palm oil futures on Malaysia's derivatives exchange fell as much as 4.3% Monday, shrugging off gains in exports because of high output and strong spillover pressure from soyoil, said trade participants. The benchmark October contract on Bursa Malaysia Derivatives ended MYR108 lower at MYR2,671 a metric tonne.

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