January 14, 2008

 

CBOT Soy Outlook on Monday: Up strong on carryover buying from Friday

 

 

Chicago Board of Trade soybean futures are seen starting Monday's day session higher, continuing the firm overnight theme on bullish carryover momentum from Friday's strong gains.

 

CBOT nearby soybean futures are called to start the session 7 to 10 cents higher, while new crop futures are seen up 20 to 30 cents.

 

In overnight e-CBOT trading, January soybeans were 8 1/4 cents higher at US$12.94 1/4 per bushel, March soybeans were 12 cents higher at US$13.10 3/4, and November soybeans were 29 cents higher at US$12.74.

 

New crop futures are expected to lead the upside charge once again, with strength in neighboring grains forcing the contracts to climb in unison to buy acres in the spring, analysts said.

 

Speculative buying is expected to be a feature, with technical strength and higher outside markets providing a supportive influence across the board as well, analysts added.

 

Meanwhile, the market continues to search for levels that will ration demand, with tightening projected ending inventories, lingering worries of heat and dryness in Argentina, expected to keep the traders adding risk premium, a CBOT broker said.

 

Cold forecasts for the central U.S. in the upcoming weekend are expected to keep feed demand strong as well, he added.

 

A technical analyst said the next upside price objective for March soybeans is to push and close prices above technical resistance at US$13.25. The next downside price objective is pushing prices below solid technical support at US$12.70 1/2, which would fill on the downside last Friday's big upside price gap on the daily bar chart.

 

First resistance for March soybeans is seen at Friday's high of US$13.10 1/4 and then at US$13.25. First support is seen at Friday's low of US$12.84 and then at this week's low of US$12.70 1/4.

 

The DTN Meteorlogix Weather Service said another ridge of high pressure is expected to build into central Argentina during the next few days promoting another round of hot weather. The ridge is expected to weaken and move off into the pacific during the latter half of the week allowing a storm system off the Chilean coast to move eastward into central Argentina with the chance of some significant rainfall. However, this situation does not look that different from the situation we were looking at last week with rainfall coming in less than expected by the guidance.

 

The National Oilseed Processors Association said Monday its December soybean crush rate was 155.907 million bushels. That was up from the November figure of 146.748 million bushels and above the 149.162 million at the same period last year. The average of estimates from analysts surveyed by Dow Jones Newswires was 152.1 million. Soyoil stocks were reported at 2.712 billion pounds. The stocks were up from the November stock figure of 2.689 billion, and above the average of estimates at 2.742 billion.

 

Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds held net long positions totaling 187,368 combined CBOT soybean futures and options contracts as of Jan. 8, up from 184,364 the prior week. Traditional large speculative traders were net long 116,086 contracts compared with net longs of 120,542 in the previous week. Commercials held net short combined futures and options positions totaling 274,157 contracts, up from the previous week's 271,961 contracts. On tap for Monday, USDA is scheduled to release its weekly export inspections report at 11:00 a.m. EST.

 

Monday is the last trading day for January futures, with contracts expiring at 1:00 p.m. EST.

 

In other news, a 10% import duty on soybeans has been scrapped by the Indonesian government in a bid to quell soaring prices of the commodity, which have threatened to hurt the local food industry, said a senior government official Monday.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Monday on record high CBOT prices. The benchmark September 2008 soybean contract settled RMB90 higher at RMB4,843 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended at another record high Monday, rising above MYR3,400 a metric tonne for the first time.