May 4, 2009

 

CBOT Soy Outlook on Monday: Up; fundamentals, technicals to extend trend

 

 

Soybean futures at the Chicago Board of Trade are poised to extend a bullish uptrend in Monday's day session, bolstered by strong market fundamentals and technicals.

 

CBOT soybean futures are called to open 20 cents to 22 cents higher. CBOT soy product futures are seen higher in tune with advances in soybeans.

 

The market's higher trend should be maintained by talk of China buying U.S. soybeans and private estimates for Argentina's soybean crop continuing to slide on top of already-tight projected ending stocks, said Vic Lespinasse, analyst with Grainsanalyst.com.

 

Private weather forecasters projecting drier near-term weather in the Midwest should promote corn plantings, and that is a bullish factor for new crop soybeans, said Lespinasse.

 

Strong technical momentum is expected to aide the bullish theme, following Friday's rise to seven-month highs as well as new highs for the 2009 calendar year. July soybeans have risen US$2.44 1/2 from March 2 to Friday's settlement of US$10.91.

 

A technical analyst said the next upside price objective for July soybeans is to push and close prices above solid technical resistance at US$11.50 a bushel. The next downside price objective is to push and close prices below major psychological support at US$10.00 a bushel.

 

The DTN Meteorlogix weather forecast said periods of dry weather during the next 10 days will allow for plantings to increase in the Midwest although some disruptions and delays are expected to continue, especially in eastern areas.

 

Large speculative traders now hold 57,094 net long positions in CBOT soybean futures and options combined contracts as of April 28, compared with net longs of 70,717 in the previous week, according to the Commodity Futures Trading Commission in its supplemental commitment of traders report.

 

Index funds decreased their net long positions in CBOT soybean futures and options. The combined number dropped to 115,921 contracts from 117,838 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 146,999 contracts, down from the previous week's 159,773 contracts, as reported in the CFTC supplemental report.

 

On tap for Monday, the U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11 a.m. EDT and its weekly crop progress report at 4 p.m. EDT.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled sharply higher Monday, catching up with big gains at CBOT over the weekend.

 

Crude palm oil futures on Malaysia's derivatives exchange gained 4.0% Monday after rising to almost MYR2,800 a metric tonne for the first time in 38 weeks on lower inventories and a surge in soyoil prices.