February 4, 2008

 

CBOT Soy Outlook on Monday: Up 10-12 cents; overnight gains, technical support

 

 

Chicago Board of Trade soybean futures are seen starting Monday's day session higher, continuing the overnight theme on follow through speculative and technical buying from Friday.

 

CBOT soybean futures are called to start the session 10 to 12 cents higher.

 

In overnight e-CBOT trading, March soybeans were 12 3/4 cents higher at US$13.00, July soybeans were 12 3/4 cents higher at US$13.20, and November soybeans were 10 cents higher at US$12.64.

 

The market remains in a bullish uptrend, with the absence of any significant bearish inputs to derail the bullish theme limiting selling interest, analysts said.

 

Technical features are expected to remain in focus amid the absence of fresh fundamental news. The market has moved into a period where there is lull of new inputs, with no major reports, Brazil and Argentina harvests looming and a clearer picture of U.S. plantings still weeks away, a CBOT floor analyst said.

 

Export demand is seen slowing this week amid Carnival celebrations in Brazil, and Lunar New Year holidays in Asian markets this week, analysts added.

 

Mixed overnight trends in outside markets are expected to provide much influence on prices, but continued price strength in U.S. wheat futures will aide new crop contracts, as the markets continue their battle for spring acres, a trader said.

 

A technical analyst said market bulls still have solid upside near-term technical momentum, with the next upside price objective for March soybeans is to push and close prices above psychological resistance at US$13.00. The next downside price objective is pushing prices below solid technical support at US$12.50.

 

First resistance for March soybeans is seen at US$12.90 and then at US$13.00. First support is seen at Friday's low of US$12.79 1/2 and then at US$12.70.

 

The DTN Meteorlogix Weather Service said heavy rains continue to raise concerns for maturing soybeans in Brazil's Mato Grosso and Goias. The southern belt may see increasing shower activity later this week or during the coming weekend.

 

In Argentina, scattered showers and cooler temperatures during the past week or so have helped ease stress to crops. Episodes of scattered light showers and no severe heat will limit any stress to crops during the next 7 days, Meteorlogix forecasts.

 

Index funds raised their net long CBOT soybean futures and options positions combined, which now total 183,581 contracts as of Jan. 29, up from 179,290 the prior week, according to Commodity Futures Trading Commission, as reported Friday in its supplemental commitment of traders report. Traditional large speculative traders were net long 108,451 contracts compared with net longs of 104,331 in the previous week. Commercials held net short combined futures and options positions totaling 252,572 contracts, up from the previous week's 246,652 contracts.

 

On tap for Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11:00 a.m. EST.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Monday, tracking gains on the Chicago Board of Trade Friday. The benchmark September 2008 soybean contract rose RMB40 to settle at RMB4,760 a metric tonne, after trading between RMB4,734/tonne and RMB4,783/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended sharply higher Monday on news that Indonesia plans to hike its export tax on crude palm oil to 25% from the current 10%, said market participants. The benchmark April contract shot up MYR113 to end at MYR3,345 a metric tonne.