September 29, 2008

 

CBOT Soy Outlook on Monday: Lower; outside markets setting tone

 

 

Chicago Board of Trade soybean futures are seen starting Monday's day session on the defensive, with the bearish theme in outside markets setting the tone for early price action, analysts said.

 

CBOT soybean futures are called 25 to 30 cents lower.

 

In overnight electronic trading, November soybeans were 29 cents lower at US$11.35. December soyoil was 130 points lower at 46.63 cents per pound and December soymeal was US$6.50 lower at US$314.20 per short tonne.

 

A lack of fresh fundamental news is expected to keep attention on outside influences, with crude oil futures down over US$5.00 a barrel and the U.S. dollar firmer attracting speculative sellers, a CBOT floor analyst said.

 

Worries about the U.S. economy continues to put downward pressure on grain and soybeans, with traders eyeing U.S. lawmakers getting ready to vote on a US$700 billion rescue package, analysts added.

 

On the fundamental side, favorable near term weather for harvesting is adding to the lower theme, but variable yield results is expected to limit losses with nearby stocks tight, traders said.

 

A technical analyst said prices are in a three-month-old downtrend on the daily bar chart. The next upside price objective for November soybeans is to push and close prices above solid technical resistance at last week's high of US$12.12 1/4 a bushel. The next downside price objective is pushing and closing prices below solid technical support at the September low of US$11.99 1/2.

 

First resistance for November soybeans is seen at US$12.00 and then at last week's high of US$12.12 1/4. First support is seen at Friday's low of US$11.55 3/4 and then at US$11.50.

 

The DTN Meteorlogix weather forecast said showers early this week may slow field work, but this does not appear to be a major problem. Cooler weather may mean lows in the 30s Fahrenheit in some locations, but this does not appear to be a damaging freeze. Warmer temperatures return during the 6-10 day period.

 

In the U.S. Delta, mainly open weather during the next 10 days will favor soybean harvests.

 

Traditional large speculative traders increased their net long positions in CBOT soybean futures and options combined contracts, which now total 22,318 contracts as of Sept. 23, compared with net longs of 17,707 in the previous week. Index funds trimmed their net long positions, which now total 134,607 contracts, down from 138,718 the prior week, according to the Commodity Futures Trading Commission, as reported Friday in its supplemental commitment of traders report. Commercials held net short combined futures and options positions totaling 125,704 contracts, up from the previous week's 123,832 contracts.

 

The U.S. Department of Agriculture is 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.

 

USDA is scheduled to release its Quarterly Grain Stocks report Tuesday at 8:30 a.m. EDT (1230 GMT). The average estimate of analysts surveyed by Dow Jones for the 4th quarter soybean usage is around 532 million bushels, bringing stocks down to 144 million bushels. Estimates ranged from 125 million to 172 million. Stocks as of Sept. 1, 2007, totaled 574 million. USDA's September ending stock projection was 140 million bushels.

 

Meanwhile, growth in global soymeal exports is likely to slow down in 2008-09 due to negative demand in some countries and lower shipments by the U.S. and Brazil, Thomas Mielke, editor-in-chief of Hamburg-based Oil World said Sunday. "In the E.U., soymeal demand could fall to 34.0-34.5 million tonnes compared to the earlier estimate of 34.70 million tonnes as we are overestimating the pork and poultry growth," said Mielke.

 

In overseas markets, crude palm oil futures on Malaysia's derivatives exchange fell as much as 9.2% Monday and ended 8.1% lower on heavy speculative selling amid weaker soyoil and crude oil and the likelihood of weak export numbers, said trade participants. The benchmark December contract on Bursa Malaysia Derivatives ended MYR188 lower at MYR2,125 a metric tonne.
   

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