March 24, 2008
CBOT Soy Outlook on Monday: Up 15-20 cents; rebound from recent declines
Chicago Board of Trade soybean futures are poised for a higher start to Monday's day session, fueled by technical buying attributed to oversold conditions, demand and overnight stability in Asian markets
CBOT soybean futures are called to start the session 15 to 20 cents higher.
In overnight electronic trading, May soybeans were 19 1/2 cents higher at US$12.26 1/2, July soybeans were 19 cents higher at US$12.41. May soyoil was 96 points higher at 55.36 cents per pound and May soymeal was US$4.10 higher at US$314.40 per short tonne.
After digesting sharp declines last week, futures are set for a dead-cat short covering bounce, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.
The ability of equity markets to stabilize coupled with Asian grain, oilseed and vegoil markets finding support overnight is providing strength to prices, as the market has reached a point where it has to take a look at fundamentals again, Roose added.
Talk of China switching some purchases from Argentina to U.S. origin due to the farmers strike in Argentina is providing underlying support, traders said. In addition, traders are beginning to switch there focus to next week's planting intention report, where many analysts believe bullish estimates will be released, traders added.
Nevertheless, with mixed tones in outside inflationary markets, traders will continue to take a cautious approach as risk aversion remains a near term feature, analysts said.
A technical analyst said very serious near-term chart damage has been inflicted recently, but the market is now well overdone on the downside on a short-term technical basis. The next upside price objective for July soybeans is to push prices above solid resistance at US$12.72 a bushel, which would fill on the upside Thursday's downside price gap on the daily chart. The next downside price objective is pushing and closing prices below psychological support at US$12.00.
First resistance for July soybeans is seen at today's high of US$12.49 and then at US$12.72. First support is seen at US$12.00 and then at US$11.80.
Index funds lowered their net long CBOT soybean futures and options positions combined, which now totals 176,541 contracts as of March 18, down from 183,252 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 79,092 contracts compared with net longs of 81,227 in the previous week. Commercials held net short combined futures and options positions totaling 224,871 contracts, down from the previous week's 234,771 contracts.
On tap for Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11 a.m. EDT.
In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Monday on a technical correction after a recent tumble. The benchmark January 2009 soybean contract settled RMB49 higher, up 1.2%, at 4,105 a metric tonne, after trading between RMB4,056/tonne and RMB4,139/tonne.
Crude palm oil futures on Malaysia's derivatives exchange rose sharply Monday but erased most of the gains towards the end of trading, after speculation of only a small growth in exports during the March 1-25 period and expectations of a cut in India's import duty on soybean oil, said trade participants. The benchmark June CPO futures on the Bursa Malaysia Derivatives ended MYR10 higher at MYR3,340 a metric tonne, off an intraday high of MYR3,541/tonne.
In other news, India's government is mulling a cut in the import tax on soybean oil, a senior government official said Monday.
Last Thursday, India's government announced a cut in the import taxes levied on most edible oils, including palm oil. Industry executives said India's soyoil imports could fall by over 50% to its lowest level in 10 years after the government lowered the import duty on palm oil while keeping the tariff on soyoil unchanged.
