July 2, 2007

 

CBOT Soy Outlook on Monday: Up 10-12 cents; USDA acreage continues to buoy

 

 

Soybean futures on the Chicago Board of Trade are expected to start Monday's day session on firm footing, buoyed by carryover momentum from Friday's strong gains.

 

CBOT soybean futures are called to start the session 10 to 12 cents higher.

 

In overnight e-CBOT trading, July soybeans were 12 cents higher at US$8.62 per bushel, and November was 12 cents higher at US$8.93 3/4.

 

Soybeans are seen continuing Friday's bullish theme, as the market continues to adjust to a new pricing structure following Friday's lower then expected 2007 acreage forecast from U.S. Department of Agriculture, analysts said.

 

The market is seen moving to levels that will ration demand, and buy additional soybean acres in South American as well as in the US next year, analyst added.

 

Overnight price strength in Asian palm oil futures is expected to lend support to soyoil and subsequently add strength to soybeans, traders said. Otherwise, the market will keep an eye on weather forecasts, as every bushel will be counted on this growing season to keep 2007-08 supplies from dropping to uncomfortable levels, analysts added.

 

A market technician said strong selling pressure on Monday would suggest a bearish double-top reversal pattern could be developing on the daily bar chart. The contract high of US$8.93 basis the November future is strong overhead technical resistance. The next upside price objective for November soybeans is closing prices above solid technical resistance at the contract high of US$8.93. The next downside price objective is closing prices below solid support at US$8.50.

 

First resistance for November soybeans is seen at US$8.93 and then at US$9.00. First support is seen at Friday's low of US$8.75 and then at US$8.65.

 

The DTN Meteorlogix Weather Service forecast said the western Midwest has favorable conditions for developing crops, although the soils in Minnesota and western Iowa have been turning drier recently. In the eastern Midwest, rain is still needed through parts of Ohio, Indiana and Michigan even after last week's showers. No significant stress to crops is expected this week as more thundershowers will be in the area during the week, Meteorlogix forecasts.

 

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 144,448 combined soybean futures and options contracts as of June 26, up from 141,923 the prior week.

 

Traditional large speculative traders were net long 101,140 contracts compared with net longs of 117,276 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 225,991 contracts, down from the previous week's 236,484 contracts.

 

Deliveries notices posted against July soybean futures totaled 2,505 lots. A customer account at JP Morgan issued 500 lots, a customer account at RJ O'Brien issued 406 lots, with a customer account at Man Financial the principle stopper of 1,057 lots. The last trade date assigned was June 29

 

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.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended higher Monday, boosted by a rally in soyoil futures, higher crude oil prices and an upbeat price forecast from influential analyst Dorab Mistry. The benchmark September contract ended at MYR2,468 a metric tonne, up MYR41 from Friday.

 

On Singapore's Joint Asian Derivatives Exchange, CPO futures were also higher, with September up US$17.75 at US$718/tonne.

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Monday, tracking strong gains in CBOT soybean futures Friday. The benchmark January 2008 soybean contract gained RMB94 to settle at RMB3,323 a metric tonne.