February 5, 2007

 

CBOT Soy Outlook on Monday: 6-8 cents firmer on follow-through buying

 

 

Chicago Board of Trade soybean futures are expected to start Monday's day session higher on firmer overnight trade and continued bullishness on expectations that fewer U.S. soybean acres will be planted in the spring, sources said.

 

Soybean futures are called to open up 6 to 8 cents per bushel.

 

In e-CBOT trade, March soybeans rose 8 1/2 cents to US$7.45 1/4.

 

Gains overnight came largely on carryover buying from a rally Friday, floor sources noted. More follow-through buying is expected Monday, they said.

 

Advances are underpinned by expectations that U.S. farmers will plant fewer acres of soybeans this year to take advantage of increased demand for corn, a floor source said. Those ideas will remain the market's focus in the near term, he added.

 

The next upside price objective for the soybean bulls is to close March prices above solid chart resistance at the 2005 high of US$7.52 1/4, a technical analyst said. The next downside price objective for the bears is closing prices below solid support at US$7.00.

 

First resistance for March soybeans is seen at Friday's contract high of US$7.38 and then at US$7.40. First support is seen at US$7.30 and then at US$7.25.

 

Aside from talk about the size of the acreage shift from soybeans to corn, there was little other news out to affect soybean futures, a CBOT floor broker said. People are talking about an outbreak of bird flu on a U.K. turkey farm, although questions about spring planting take center stage, he said.

 

About 2,500 turkeys died of H5N1 strain of bird flu on the farm owned by Bernard Matthews PLC, Europe's largest turkey producer. It was the first time H5N1 had been found on a U.K. farm.

 

All 159,000 turkeys at the farm, located 100 miles northeast of London, were ordered to be slaughtered.

 

"The acreage is more important," the floor broker said when asked whether the news would impact CBOT grain trading.

 

In other news, the Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds held net long positions totaling 133,886 combined CBOT soybean futures and options contracts as of Jan. 30, down slightly from 134,047 contracts the prior week. Traditional large speculative traders were net long 71,437 contracts, up from 66,233 contracts the previous week, the CFTC said.

 

Index funds were net long combined soyoil futures and options positions by 67,655 contracts, down from the previous week's 69,320 lots, according to the CFTC. Speculative funds were reported net long 54,934 contracts.

 

Large speculative traders were reported net long combined futures and options positions in soymeal by 33,566 lots, compared with net longs of 30,731 contracts last week.

 

Looking at the weather, generally favorable conditions are forecast for developing soybeans through the major growing areas of Brazil, although persistently wet weather in northern areas is causing an increase in soybean rust, DTN Meteorlogix reported. Dry weather has to be watched through far southern areas, the weather firm said.

 

In Argentina, more rain than expected fell in Cordoba, Sante Fe and northern Buenos Aires during the weekend with another significant rain possible late in the week, Meteorlogix said. This should maintain favorable conditions in major soybean areas, although conditions are still "quite stressful" for crops in La Pampa and southwest Buenos Aires, the firm added.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Monday following advances at the CBOT. Gains, however, were held back by lackluster domestic demand, sources said.

 

Traders in China, the world's largest soybean importer, bought three to five cargoes of soybeans over the past week, mainly from South America, according to JCI Shanghai, a Chinese commodities analysis firm.

 

China's soymeal suppliers also are stepping up on their soybean purchases, partly because they don't expect much of a fall in imported soybean prices over the next few months and also because they have insufficient stocks at crushing plants, analysts added.

 

Crude palm oil futures on the Bursa Malaysia Derivatives, meanwhile, ended higher Monday, boosted by a rally in rival soyoil futures and stronger crude oil prices.