February 20, 2007

 

CBOT Soy Outlook on Tuesday: 2-4 cents higher on follow-through buying

 

 

Chicago Board of Trade soybean futures are expected to start Tuesday's day session higher on follow-through buying from firmer overnight trade, sources said.

 

Soybean futures are called to open 2 to 4 cents higher per bushel.

 

In e-cbot overnight trade, March soybeans were 2 1/4 cents higher at US$7.69 1/4, while May soybeans rose 2 3/4 cents to US$7.85 1/4.

 

Along with momentum from the overnight, soybeans also have carryover technical strength from gains last week, a source said. May soybean prices on Friday scored a fresh contract high and closed near session highs.

 

"Bulls still have solid upside technical momentum on their side and gained more last week," a technical analyst said.

 

The next major upside price objective for the soybean bulls is to close May prices above solid psychological resistance at US$8.00. The next downside price objective for the bears is closing prices below solid support at US$7.50.

 

First resistance is seen at Friday's day session contract high of US$7.83 3/4 and then at US$7.90. First support is seen at US$7.75 and then at Friday's low of US$7.70 1/2.

 

Some bullish concerns about how the weather will likely keep the market on edge, a floor source said.

 

For the U.S., there are lingering worries about dry conditions this summer, floor sources said. The concerns helped prices rally Friday.

 

In Brazil, meanwhile, wet weather across northern Mato Grosso will disrupt early harvest and impact crop quality, according to DTN Meteorlogix. Generally favorable conditions are seen elsewhere in the country's major growing areas, the weather firm reported.

 

In Argentina, near to below normal temperatures and some shower activity through central soybean areas will maintain generally favorable conditions for the developing crop, Meteorlogix said.

 

Argentina's 2006 soybean exports totaled 8,186,105 metric tonnes, down 16.7% compared to the 9,822,626 shipped in 2005, the latest Agriculture Secretariat data show. More soybeans were processed domestically, leading to decreased bean exports and increased subproduct exports.

 

China was the primary market for Argentina's soybeans, importing 6,374,448 tonnes compared to 7,339,425 in 2005.

 

China is seeking to boost domestic processing of soybeans and has launched a major expansion of capacity to produce soyoil and meal from domestic and imported beans, according to analysts.

 

Activity on China's Dalian Commodity Exchange, however, will not be much of a factor for CBOT soybeans this week as the exchange will be closed for the Lunar New Year, which began Feb. 18, sources noted.

 

"That may put soybeans a little into the doldrums," one analyst said about the holiday.

 

In other news, the Commodity Futures Trading Commission reported Friday that index traders were net long 135,538 combined CBOT soybean futures and options contracts as of Feb. 13, down slightly from 135,842 lots in the prior week. Large speculative traders were net long 81,876 soybean contracts, down from 84,901 contracts the previous week, according to the CFTC.

 

Index traders were net long combined soyoil futures and options positions by 72,803 contracts, up slightly from the previous week's 72,038 contracts. Large speculative traders were net long 63,518 soyoil contracts, up from 64,304 contracts a week earlier.

 

Large speculative traders were reported to be net long combined futures and options positions in soymeal by 55,260 lots, compared to net longs of 39,350 contracts a week earlier, according to the CFTC.