October 27, 2008
CBOT Soy Outlook on Monday: Lower on faltering equities
Soybean futures on the Chicago Board of Trade are called to open lower Monday under continued pressure from faltering global equities, squeamish investor sentiment and the strengthening U.S. dollar.
CBOT soybean futures are called 3-5 cents lower, after a slight slip overnight.
In overnight electronic trading, November soybeans lost 3/4 cent, closing at US$8.63. January soybeans dropped 2 1/4 cents to US$8.64 3/4. December soyoil was 41 points lower at US$31.06 cents per pound, while December soymeal dropped US$2.40 to US$265.90 per short tonne.
"Financials are screaming lower, so we'll probably move lower; we're not really trading out fundamentals," said Vic Lespinasse, an analyst for grainanalyst.com.
"Soybeans are probably 75% harvested," he added, noting that a post-harvest rally usually happens at this point in the season.
But this season has been defined by limited sales, as producers sit on the sidelines disgusted by the prices - now down almost 50% from the year's high reached this summer - so the typical influences defining price cycles have been thrown off kilter, he said.
Soybean bears' next conquest is to close January soybeans below "solid technical support at the October low of US$8.38 1/2," a market technician said, pegging first support at Friday's low of US$8.48.
To win the day in their favor, soybean bulls must close above solid technical resistance at last week's high of US$9.55, he said.
He sees first resistance first resistance at US$9, then US$9.25.
Meanwhile, traditional large speculative traders now hold 2,231 net short positions in CBOT soybean futures and options combined contracts as of Oct. 21, compared with net longs of 5,908 in the previous week. Index funds trimmed their net long positions, which now total 107,839 contracts, down from 110,440 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 79,463 contracts, down from the previous week's 82,887 contracts.
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.
Weekend rains will move east across the Corn Belt Monday, then the region should dry out for the week, according to DTN Meteorlogix.
But the weather has caused increasing disruption and delay to harvest, the private weather firm said.
Temperatures should range from 23-59 degrees Fahrenheit, DTN said.
In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Monday, tracking Friday's CBOT losses.