August 25, 2008

 

CBOT Soy Outlook on Monday: Seen stronger on dryness concerns

 

 

Soybean futures on the Chicago Board of Trade are called to open Friday's day session as dryness concerns continue, the U.S. dollar trades down as crude oil gains.

 

CBOT soybean futures are called up 35-40 cents higher, expected to add to overnight gains.

 

In overnight electronic trading, September soybeans gained 34 1/2 cents closing at US$13.55 1/2, and November soybeans added 38 3/4 cents to US$13.65 3/4. December soyoil was 64 points higher at 55.57 cents per pound, while December soymeal increased US$10.90 to US$370.90 per short tonne.

 

"Soybeans look ready for strong gains on the open this morning, with dry weather concerns driving buying after Friday's setback," Bryce Knorr, Farm Futures senior editor, said in his daily commentary. "November futures took out last week's highs during the overnight session, challenging its 100-day moving average in the process. A move higher now targets the US$14 and US$14.25 levels."

 

Much more vulnerable than corn to adverse weather at this point in the growing season, soybeans are "in charge of the market for now," he said.

 

With little fresh news to swing the fundamentals, "any rallies vulnerable to profit taking," but, Knorr added, soybeans may also be gaining from "outside money flowing back into the market, as speculators and investors again seek out higher returns than they can get on Wall Street."

 

Despite Friday's close on pressure from outside markets and profit-taking bulls "still have the near-term technical advantage as prices are in a three-week uptrend on the daily bar chart," a market technician said. The next objective for soybean bulls is to push and close above solid technical resistance at last week's high of US$13.39 3/4, he said.

 

He sees first resistance for November soybeans at Friday's high of US$13.48.

 

As the bears move to penetrate the US$13 psychological barrier, first support lies at Friday's low of US$13.14, the technician said.

 

Mostly dry corn conditions are expected to dominate the Corn Belt Monday, except for a few light showers totaling a quarter inch or less in the most southern areas of the region, according to DTN Meteorlogix.

 

The private weather firm forecast showers and thunderstorms in parts of the eastern Corn Belt Wednesday and Thursday and dry conditions in the West through the week.

 

Temperatures will hover in the near-to-above-normal range through Friday, the forecast said.

 

Index funds trimmed their net long CBOT soybean futures and options positions combined to total 140,568 contracts as of Aug. 19, down from 142,389 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 35,409 contracts compared with net longs of 38,822 in the previous week. Commercials held net short combined futures and options positions totaling 146,507 contracts, down from the previous week's 147,591 contracts.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled slightly higher Monday, supported by gains in soymeal prices.

 

The benchmark January 2009 soybean contract settled RMB15 higher at RMB4,327/tonne, or 0.3%, after trading in a range of RMB4,293-RMB4,356/tonne.

 

Soybean prices opened lower, along with the fall at CBOT Friday, but edged slightly higher during the session.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower on bearish comments made at a palm oil conference in Kuala Lumpur Monday and weaker-than-expected exports, trade participants said.

 

The benchmark November contract on the Bursa Malaysia Derivatives ended MYR115 lower at MYR2,600 a metric tonne, near the intraday low of MYR2,575/tonne.

 

Large speculative traders were net long 37,216 contracts combined CBOT soymeal futures and options positions compared with net longs of 32,413 in the previous week, according to the CFTC commitment of traders report. The data showed commercials were reported to hold net short combined futures and options positions totaling 50,232 contracts as of Aug. 19, up from the previous week's 47,560 contracts.

 

Index funds were net long 73,290 futures and options combined CBOT soyoil positions as of Aug. 19, according to the supplemental to the CFTC's commitment of traders report. That was up from 69,707 the prior week.

 

Traditional large speculative traders were net short 8,217 contracts, down from a net short position of 9,795 in the previous week. Commercials held net short positions totaling 67,776 contracts, down from the previous week's 62,860 contracts.