April 7, 2008

 

CBOT Soy Outlook on Monday: Up 6-8 cents, overnight theme, outside support

 

 

Chicago Board of Trade soybean futures are seen starting Monday's day session on firm footing, following the lead of the overnight theme with technical strength and the influence of outside markets lending support.

 

CBOT soybean futures are called to start the session 6 to 8 cents higher.

 

In overnight electronic trading, May soybeans were 6 cents higher at US$12.83, July soybeans were 5 3/4 cents higher at US$12.99 3/4. May soyoil was 38 points higher at 56.99 cents per pound and May soymeal was US$1.10 lower at US$332.40 per short tonne.

 

The market continues to bounce from prior losses, benefiting from a technical recovery from the market's recent downtrend, with firmer energy, metal and palm oil futures aiding the higher tone, analysts said.

 

Lingering talk that the bearish data in last week's planting and stocks reports didn't change the overall bullish long range outlook of the market is rekindling speculative buying interest, analysts added.

 

Meanwhile, traders anticipate some position evening and spread rolling as traders and funds exit nearby positions heading toward the delivery period, a CBOT floor broker said.

 

Positioning ahead of the U.S. Department of Agriculture's supply and demand report and concerns wet conditions in the southern Midwest could cause planting delays for corn and possibly shift some corn acres to soybeans are seen limiting upside potential, he added.

 

USDA is scheduled to release its April supply and demand estimates Wednesday at 8:30 a.m. EDT. The average of analysts estimates in a Dow Jones Newswires survey peg 2007-08 soybean ending stocks at 157 million bushels, up from the March estimate of 140 million.

 

A technical analyst said prices are still in a five-week-old downtrend on the daily bar chart but market bulls have regained fresh technical momentum. The next upside price objective for July soybeans is to push prices above psychological and trend-line technical resistance at US$13.00 a bushel. The next downside price objective is pushing and closing prices below solid technical support at US$12.50.

 

First resistance for July soybeans is seen at Friday's high of US$12.97 and then at US$13.00. First support is seen at Friday's low of US$12.75 and then at US$12.50.

 

Index funds lowered their net long CBOT soybean futures and options positions combined, which now totals 171,570 contracts as of April 1, down from 175,137 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 62,638 contracts compared with net longs of 76,993 in the previous week. Commercials held net short combined futures and options positions totaling 197,607 contracts, down from the previous week's 218,540 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, soybean futures traded on China's Dalian Commodity Exchange settled higher Monday, supported by rising vegetable oil prices. The benchmark January 2009 soybean contract settled RMB85 higher, or 2.2%, at RMB3,959 a metric tonne.

 

Benchmark crude palm oil futures on Malaysia's derivatives exchange ended 2.6% higher in range-bound trade Monday but stayed above last week's resistance of MYR3,300 a metric tonne throughout the day, amid firm soybean oil prices and concerns over a possible strike by Indonesian port workers Tuesday, trade participants said. The benchmark June contract on the Bursa Malaysia Derivatives ended MYR85 higher at MYR3,382/tonne, after moving in a range between MYR3,321 and MYR3,387.