March 19, 2007

 

CBOT Soy Outlook on Monday: Up 2-3 cents, following through on Friday gains

 

 

Chicago Board of Trade soybean futures are expected to start Monday's day session on firm footing, supported by follow-through buying from Friday's gains in the absence of fresh market moving news.

 

Soybean futures are called to open 2 to 3 cents higher.

 

In e-CBOT trade, May was 2 3/4 cents higher at US$7.56 1/4 and November soybeans were 2 3/4 cents higher at US$7.96 1/4.

 

Technical buying associated with a belief that recent declines were a bit overdone is expected to generate short covering, as the market begins to position itself ahead of the planting intentions report, analysts said. The U.S. Department of Agriculture is scheduled to release its planting intentions estimate for the 2007-08 marketing year on Friday.

 

Traders anticipate the market will add a little weather premium heading into spring plantings, and concerns over wet conditions in Brazil causing harvest delays will aid the supportive tone. Otherwise, a choppy theme is anticipated as futures will remain at the mercy of fund activity, with traders continuing to take a cautious approach until a clear indication of spring plantings can be established, analysts added.

 

A market technician said recent technical damage has not been serious, but market bulls have wilted. The market would regain some fresh upside technical momentum by producing a close above solid chart resistance at last week's high of US$7.70 3/4 basis May futures. The next downside price objective is closing prices below solid support at this month's low of US$7.39 1/2.

 

First resistance for May soybeans is seen at Friday's high of US$7.58 1/2 and then at US$7.65. First support is seen at Friday's low of US$7.45 and then at US$7.39 1/2.

 

U.S. Midwest cash soybean basis bids were mostly steady Monday, cash traders said. Spot U.S. cash soybean bids were down 2 cents in Burlingtonne, Iowa, up 3 cents in Champaign, Illinois, and up 3 cents in Evansville, Indiana.

 

The DTN Meteorlogix Weather Service forecast said the western Midwest will encounter mostly rain this week, with the heaviest being in southern areas. Delays to transportation are possible but nothing major is expected. In the eastern Midwest, episodes of showers and some rain are forecast for the next seven days. This should keep any fieldwork slow, Meteorlogix reported.

 

The Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds were reported to hold net long positions totaling 135,695 combined soybean futures and options contracts as of March 13, up from 134,460 the prior week. Traditional large speculative traders were net long 64,114 contracts compared with net longs of 53,382 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 183,567 contracts, up from the previous week's 171,936 contracts.

 

On tap for Monday, the U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 10:00 a.m. CDT (1500 GMT).

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Monday, following Friday's gains on CBOT. The benchmark September 2007 contract rose RMB18 to settle at RMB3,209 a metric tonne.

 

Crude palm oil futures on Bursa Malaysia Derivative ended higher Monday after the market saw strong buying interest in the afternoon amid talk of a smaller Brazilian soybean crop and expectations of strong demand from India, traders said. The June contract ended at MYR1,970 a metric tonne, up MYR23 from Friday's close, after bouncing off an early low of MYR1,942/tonne.