April 14, 2008

 

CBOT Soy Outlook on Monday: Up, overnight, outside markets direct prices

 

 

Chicago Board of Trade soybean futures are expected to start Monday's day session higher, taking its lead from the overnight session, with the supportive influence of outside markets underpinning prices.

 

CBOT soybean futures are called to start the session 12 to 20 cents higher.

 

In overnight electronic trading, May soybeans were 21 1/2 cents higher at US$13.54, July soybeans were 20 3/4 cents higher at US$13.70. May soyoil was 96 points higher at 60.90 cents per pound and May soymeal was US$2.40 higher US$346.90 per short tonne.

 

The combination of the weaker U.S. dollar, firmer energy and gold prices as well as strong underlying demand remain bullish features buoying prices, analysts said.

 

Lingering uncertainty surrounding the potential for an Argentine farmers strike to resume coupled with ideas new crop futures have to gain at the expense of corn sustain adequate projected 2008 acreage increases, is seen aiding upside movement, analysts added.

 

Meanwhile, leaders of Argentine farm groups will meet with Cabinet Chief Alberto Fernandez on Monday to continue talks aimed at avoiding a repeat of last month's crippling farm strike, the president of the Rural Confederation, Mario Llambias, told reporters Friday.

 

A market technician said the next upside price objective for July soybeans is to push and close prices above psychological resistance at US$14.00 a bushel. The next downside price objective is pushing and closing prices below solid technical support at US$13.38 3/4, which would fill on the downside last week's upside price gap on the daily bar chart.

 

First resistance for July soybeans is seen at Friday's high of US$13.70 and then at last week's high of US$13.96 1/2. First support is seen at Friday's low of US$13.44 and then at US$13.38 3/4.

 

The National Oilseed Processors Association said 148.2 million bushels of soybeans were crushed in March, up 9.242 million bushels from February's crush level, but lower than the average analyst estimate of 151.2 million bushels. Pre-report estimates for the crush ranged from 150.0 million to 153.1 million bushels. NOPA said soyoil yield was 11.65 pounds per bushel, above the 11.58 recorded in February. Soyoil stocks were 2.529 billion pounds, down from last month's 2.717 billion.

 

Index funds lowered their net long CBOT soybean futures and options positions combined, which now totals 165,003 contracts as of April 8, down from 171,570 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 71,920 contracts compared with net longs of 62,638 in the previous week. Commercials held net short combined futures and options positions totaling 202,832 contracts, up from the previous week's 197,607 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, soy futures traded on the Dalian Commodity Exchange settled higher Monday on short-covering on the back of a government official's comment on grain prices, and analysts said further downside is very limited, given higher cash values for soymeal and soyoil. The benchmark January 2009 soybean contract settled 1.3% higher at RMB4,066 a metric tonne after trading between RMB3,972 and RMB4,156/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended 4% higher Monday on short-covering following bullish price projections at a vegetable oils conference in Dubai, said trade participants. The benchmark June contract on the Bursa Malaysia Derivatives ended MYR141 higher at an intraday high MYR3,595/tonne, recovering from an intraday low of MYR3,428.

 

In other news, a government official said Monday, Chinese companies should take the lead in developing the domestic soybean processing industry, which is now dominated by foreign companies. The almost 50% soybean processing output by foreign companies has squeezed development space for domestic companies, said He Yanli, deputy chief of the industrial department under the National Development and Reform Commission, during a grain and edible oil conference.

 

The NDRC will issue guidelines on soybean industry development; these will be aimed at regulating the processing sector, she said, without indicating a timetable for the issuance of guidelines.