February 26, 2007

 

CBOT Soy Outlook on Monday: 7-9 cents firmer on follow-through buying

 

 

Chicago Board of Trade soybean futures are expected to start Monday's day session higher on follow-through buying from firmer overnight trading and with underlying support from concerns about wet weather, traders and analysts said.

 

Soybean futures are called to open 7 to 9 cents higher.

 

In e-cbot overnight trading, May soybeans rose 9 1/4 cents to US$8.03 1/4.

 

May soybean prices Friday closed lower and near the session low on some mild profit-taking pressure, traders said. The market, however, remains technically strong and prices appear poised to continue their rebound in Monday's day session, traders and analysts noted.

 

There will likely be some speculative buying as market participants are expecting to see friendly data from the U.S. Department of Agriculture's 2007 Outlook Forum on March 1-2, an analyst said.

 

"Bulls still have good upside technical momentum on their side, and are looking for more in the near term," a technical analyst added.

 

The next major upside price objective for the soybean bulls is to close May prices above solid resistance at US$8.50. The next downside price objective for the bears is closing prices below solid support at US$7.70.

 

In other developments, precipitation across parts of the U.S. during the weekend sparked concerns that conditions will be soggy for spring planting, a CBOT floor broker said. A new storm is expected to hit the Midwest this week, brining snow, ice and rain to the region, according to DTN Meteorlogix.

 

"It's almost March 1 already," the floor broker said. "The ground is going to be pretty wet."

 

Weather conditions also have been wet recently in northern soybean areas on Brazil, disrupting the early harvest and raising concerns about damage to the crop.

 

The Meteorlogix forecast calls for a more favorable weather pattern for the harvest in the north, at least for a few more days. Rains in the south during the weekend will maintain favorable growing conditions, the weather firm said.

 

In Argentina, moderate to heavy rain will provide adequate to surplus soil moisture for crops, Meteorlogix reported. Some flooding may develop if heavy storms occur as expected, the firm said.

 

The Buenos Aires Cereals Exchange raised its harvest estimate for the 2006-07 soybean crop to a minimum of 45 million metric tonnes from a previous forecast of 44.3 million, the exchange said Friday in its weekly crop report.

 

Rain improved crop conditions, helping boost the average national yield by 2.2% more than the exceptional yields of the 2004-05 season, the exchange said. If diseases can be kept under control and a favorable climate continues, the exchange said production could be greater than 45 million tonnes.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Monday, catching up with gains in soybean contracts on the Chicago Board of Trade. CBOT contracts rose in most of the sessions last week, when Chinese markets were closed in celebration of the Lunar New Year holiday.

 

China's soybean imports will likely total around 32 million metric tonnes this year, a consulting body backed by the country's top economic planner said in a report Monday. In 2006, China's soybean imports rose 6.3% to 28.27 million tonnes. China is the world's biggest importer of soybeans.

 

China's soyoil imports, meanwhile, are expected to total around 1.7 million tonnes in 2007, the price-monitoring center under the National Development and Reform Commission said.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Monday on the strength of other related commodities, such as soyoil and crude oil.

 

In other news, index funds increased their long CBOT soybeans futures and options positions by 1,751 lots and their short positions by 497 lots in the week ended Feb. 20, according to the Commodity Futures Trading Commission. Index funds are net long 136,792 CBOT soybeans contracts, the CFTC said.

 

Large non-commercial traders increased their long positions by 1,528 contracts and their shorts by 2,168 contracts, the CFTC reported. They are net long 81,237 contracts.

 

In soyoil, index funds increased their long CBOT futures and options positions by just 57 contracts and kept short positions unchanged, the CFTC reported. The index funds are net long 72,860 CBOT soyoil contracts, according to the CFTC.

 

In soymeal, large non-commercial traders increased long CBOT futures and options positions by 6,469 lots and cut shorts by 1,665 lots. The non-commercial traders are net long 63,393 CBOT soymeal positions, according to the CFTC.

 

On Monday, the U.S. Department of Agriculture is scheduled to release its weekly export inspection report at 11 a.m. EST.