May 14, 2007

 

CBOT Soy Outlook on Monday: Up 4-6 cents on demand outlooks, technicals

 

 

Chicago Board of Trade soybean futures are seen starting Monday's day session on firm footing on follow through buying from Friday amid supportive underlying fundamentals and technical strength, analysts said.

 

CBOT soybean futures are called to start the session 4 to 6 cents higher.

 

In overnight e-CBOT trading, July soybeans gained 5 3/4 cents to US$7.67 1/2 per bushel, and November gained 6 cents to US$7.96 3/4.

 

Technically the market is strong and with concerns that the margin of error for the U.S. 2007-08 crop has shrunk, traders are adding risk premium after Friday's supportive supply and demand outlooks, analysts said.

 

The market is sending a signal that South America needs to offset lower acreage in the U.S. as concerns new crop demand will exceed production in the U.S. with a large projected decline in new crop ending stocks attracting buyers, said Don Roose, president U.S. Commodities in West Des Moines Iowa.

 

A technical analyst said prices closed near mid-range Friday, but did see a bullish upside breakout from a trading range on the daily bar chart, basis the July future. Market bulls gained fresh upside technical momentum, with a 2 1/2-month-old downtrend on the daily bar chart was negated Friday, he said. Soybean bulls would regain better upside technical momentum by producing a close above solid chart resistance at Friday's high of US$7.68 1/2, while the next downside price objective is closing prices below solid support at last week's low of US$7.35, the analyst reports.

 

First resistance for July soybeans is seen at Friday's high of US$7.68 1/2 and then at US$7.75. First support is seen at US$7.58 and then at Friday's low of US$7.53.

 

The National Oilseed Processors Association said Monday its April soybean crush rates were 138.720 million bushels, above the average of analysts' expectations at 137.1 million bushels. It was also significantly below the March figure of 147.991 million bushels. Analysts expected a decline in the crush due to seasonal processor downtime, according to a survey of industry analysts. Soyoil stocks were reported at 2.901 billion pounds, below average trade estimate of 3.013 billion and below the March stock figure of 2.933 billion.

 

The Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds were reported to hold net long positions totaling 137,846 combined soybean futures and options contracts as of May 8, up from 137,544 the prior week. Traditional large speculative traders were net long 45,261 contracts compared with net longs of 49,529 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 151,093 contracts, down from the previous week's 154,073 contracts.

 

On tap for Monday, the U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11 a.m. EDT (1500 GMT) and weekly crop progress reports at 4:00 p.m. EDT.

 

Deliveries posted against the CBOT May soy future reached 260 contracts. Large issuers included the customer account of Man Professional Clearing which issued 158 contracts and the customer account of Man Professional Clearing which stopped 109 contracts. The last trade assigned was May 11.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled sharply higher Monday, boosted by the 2007/08 stocks estimate from the USDA. The benchmark September 2007 contract settled RMB68 higher at RMB3,211 a metric tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply higher Monday, on borrowed strength from strong gains in CBOT soybean oil futures and overall bullish sentiment ahead of key Malaysian fundamental data due for release Tuesday. The benchmark July contract ended at MYR2,389 a metric tonne, up MYR64, but well below the key resistance point of MYR2,400/tonne.