April 6, 2009

 

CBOT Soy Outlook on Monday: Fundamentals, technicals seen lifting prices

 

 

Bullish fundamentals and technical momentum are seen combining to lift Chicago Board of Trade soybean futures to start Monday's day session.

 

CBOT soybean futures are called 8 cents to 10 cents higher.

 

Tight old crop inventories and technical strength with nearby soybean futures rising above the psychological US$10 per bushel level overnight are bullish influences for prices, said Vic Lespinasse, analyst with Grainsanalyst.com.

 

Declining crop projections for Argentina's soybean crop are expected to aide the supportive tone as well.

 

However, the market is not expected to climb as high as overnight prices initially, as early weakness in equities, crude oil futures and a slightly firmer U.S. dollar index may temper initial advances, Lespinasse added.

 

A technical analyst said the next upside price objective for May soybeans is to push and close prices above solid technical resistance at the January high of US$10.24 a bushel. The next downside price objective is pushing and closing prices below solid technical support at US$9.20 a bushel.

 

Higher price action in neighboring grains amid cold, wet central weather may lend support to futures.

 

The DTN Meteorlogix weather forecast said wet conditions and cold temperatures in the Midwest may keep field work slow early this week, while wet conditions potentially keep field work slow later in the week as well.

 

The weather is a little bearish for new crop soybeans, but adjustments in the corn/soybean price ratio should underpin deferred contracts, Lespinasse said.

 

Soy product futures are seen higher, in tune with the overnight theme.

 

Large speculative traders now hold 22,138 net long positions in CBOT soybean futures and options combined contracts as of March 31, compared with net longs of 17,176 in the previous week, according to the Commodity Futures Trading Commission in its supplemental commitment of traders report.

 

Index funds increased their net long positions in CBOT soybean futures and options. The combined number rose to 110,054 contracts from 110,026 the prior week, according to CFTC in its supplemental commitments of traders report released Friday. Commercials held net short combined futures and options positions totaling 104,133 contracts, up from the previous week's 101,955 contracts, as reported in the CFTC supplemental report.

 

On tap for Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11 a.m. EDT.

 

Argentina's Buenos Aires Cereals Exchange on Friday cut its forecast for 2008-09 soybean production by 1.8 million metric tonnes to 39.4 million tonnes. Early drought across the farm belt and continued dryness in the northern fields caused the drop in expectations, with yields coming in worse than previously expected, the exchange said in its weekly crop report.

 

In overseas markets, Crude palm oil futures on Malaysia's derivatives exchange ended slightly lower Monday on long liquidation and profit-taking, said trade participants.

 

China's soybean, soymeal, and soyoil futures traded on the Dalian Commodity Exchange were closed Monday on account of the Tomb Sweeping festival.