August 13, 2007

 

CBOT Soy Outlook on Monday: Up 10-12 cents; e-CBOT, hot, dry southern midwest

 

 

Chicago Board of Trade soybean futures are expected to start Monday's day session higher, in tune with overnight trade, as heat and dryness issues in the southern Midwest underpin prices.

 

CBOT soybean futures are called to start the session 10 to 12 cents higher.

 

In overnight e-CBOT trading, August soybeans were 11 cents higher at US$8.61 per bushel, and November was 11 1/4 cents higher at US$8.83.

 

Hot, dry weekend conditions in the southern Midwest into the Delta is serving as the catalyst to attract risk premium, with outlooks for declines in crop conditions for the sixth week in a row adding strength as well, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Traders said technical buying, spillover strength from wheat and palm oil futures are seen aiding the supportive tone.

 

However, moderating weather forecasts, with some forecasters opening up the possibility of rains and a break from the heat moving into hot, dry southern areas of the Midwest later in the week should provide some caution to limit upside potential, Roose added.

 

A technical analyst said Friday's price action scored a bearish outside day down on the daily bar chart Friday. The fact that beans couldn't post any strength by the close, in the wake of a friendly USDA report Friday morning, should worry the bulls a bit, he said. The next downside price objective for November soybeans is closing prices below solid support at US$8.50. The next upside price objective is pushing prices above solid technical resistance at Friday's high of US$8.81 1/2.

 

First resistance for November soybeans is seen at US$8.75 and then at US$8.81 1/2. First support is seen at US$8.64 and then at Friday's low of US$8.59.

 

The DTN Meteorlogix Weather Service forecast said the western Midwest has a chance for a few light showers in southern areas Monday. There is a chance for a few light showers with locally heavier conditions are forecasted for Tuesday and Wednesday. Temperatures will average above normal during this period with highs ranging from the middle 80s to the upper 90s Fahrenheit, with the warmest conditions in the west and south.

 

In the eastern Midwest, a few thunderstorms are on tap for southern areas early Monday, dry elsewhere in the region. There is a chance for scattered thundershowers, in northern and eastern areas Tuesday or Wednesday. Only a few isolated thundershowers are on tap for southwestern areas during this time. Temperatures will average above to well above normal south, near to above normal north. Highs in the upper 90s F for southern areas during this period, 80s to low 90s F north, Meteorlogix forecasts.

 

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 154,182 combined soybean futures and options contracts as of August 7, down from 154,470 the prior week.

 

Traditional large speculative traders were net long 86,390 contracts compared with net longs of 82,931 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 218,098 contracts, up from the previous week's 216,310 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.

 

August soybean deliveries totaled 114 lots. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was August 9.

 

In overseas markets, crude palm oil futures on Malaysia's derivatives exchange ended slightly higher Monday but the market struggled to keep momentum in the absence of several buyers and sellers. The benchmark October contract ended at the day's high of 2,530 ringgit a metric tonne, up MYR15 from Friday, after moving between MYR2,484-MYR2,530/tonne.

 

Soybean futures traded on China's Dalian Commodity Exchange settled sharply higher Monday on a strong demand outlook amid drought concerns, analysts said. The benchmark May 2008 soybean contract settled 86 yuan, or 2.4%, higher at RMB3,618 a metric tonne.