August 20, 2007

 

CBOT Soy Outlook on Monday: Down 3-5 cents, e-CBOT weakness, midwest rains

 

 

Chicago Board of Trade soybean futures are seen starting Monday's day session on the defensive, following the lead of overnight trade with Midwest rains applying pressure to prices.

 

CBOT soybean futures are called to start the session 3 to 5 cents lower.

 

In overnight e-CBOT trading, September soybeans were 3 cents lower at US$8.08 1/2, and November soybeans were 5 cents lower at US$8.22 3/4.

 

The market is poised to start on weaker footing following weekend rains and wet outlooks for the week, said Don Roose of U.S. Commodities. However, the declines should be held in check by concerns that the northern Midwest may have reached the threshold of moisture, as conditions that are to wet could promote disease problems, he added.

 

Meanwhile, technical weakness will apply pressure with traders expected to take cautious approach to trade as they continue to monitor activity in outside financial markets, a floor analyst said.

 

A technical analyst said serious chart damage was inflicted last week, including the formation of a bearish head-and-shoulders top reversal pattern on the daily bar chart. The next downside price objective for November soybeans is closing prices below solid support at last week's low of US$8.04 1/2. The next upside price objective is pushing prices above solid technical resistance at US$8.51 1/2, which would fill on the upside last Thursday's downside price gap on the daily chart.

 

First resistance for November soybeans is seen at Friday's high of US$8.30 and then at US$8.36. First support is seen at US$8.25 and then at US$8.20.

 

The DTN Meteorlogix Weather Service forecast said heavier than expected storms occurred in the western and northern Midwest during the weekend, and isolated storms in the northern Delta were not expected.

 

Heavy storms associated with a near stationary cold front have likely caused flooding and some crop lodging in northern Iowa, southern Minnesota and Wisconsin during the weekend, Meteorlogix reports. Rains from these storms will favor the final filling period for soybeans, except in areas with severe flooding. The southern part of the eastern belt may see some beneficial rains Monday before drier and hotter weather returns during the next few days. Despite a few isolated storms in the Delta this weekend, it continues to be a very stressful period for soybeans, Meteorlogix said.

 

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 150,860 combined soybean futures and options contracts as of Aug. 14, down from 154,182 the prior week.

 

Traditional large speculative traders were net long 91,549 contracts compared with net longs of 86,390 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 220,710 contracts, up from the previous week's 218,098 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.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Monday, helped by Friday's gains on CBOT. The benchmark May 2008 soybean contract settled RMB32 higher at RMB3,550 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange were mostly lower Monday, tracking overnight losses in CBOT and on concerns over a possible build-up of stocks and higher supplies. The benchmark November contract at Bursa Malaysia Derivatives ended at MYR2,366/tonne, down MYR12 from the previous close.