September 10, 2007

 

CBOT Soy Outlook on Monday: Up 5-7 cents; wheat spillover, technical strength

 

 

Chicago Board of Trade soybean futures are poised for a firm start to Monday's day session, taking its cue from the overnight theme, with spillover from wheat and technical strength underpinning features.

 

CBOT soybean futures are called to start the session 5 to 7 cents higher.

 

In overnight e-CBOT trading, September soybeans were 5 1/4 cents higher at US$8.96 1/4, and November soybeans were 7 cents higher at US$9.12 1/4.

 

The bullish influence of sharply higher opening calls in wheat futures coupled with solid technical support is expected to keep buyers in control of price direction in early trade, analysts said.

 

A quiet news front will keep traders focused on technicals and outside influences, while seasonal pressure and position evening ahead of Wednesday's crop report limits upside potential, traders added.

 

A technical analyst said market bulls still have the near-term technical advantage as prices are in a steep uptrend from the August low. The next upside price objective for the bulls is pushing and closing prices above strong resistance at last week's high of US$9.16 ½ basis November futures. The next downside price objective is closing prices below solid support at last week's low of US$8.87.

 

First resistance for November soybeans is seen at Friday's high of US$9.07 1/2 and then at US$9.16 1/2. First support is seen at US$9.00 and then at US$8.95.

 

The U.S. Department of Agriculture is scheduled to release its latest production, yield and supply and demand estimates Wednesday at 8:30 a.m. EDT. The average of analysts' estimates pegged 2007 soybean production at 2.650 billion bushels, up from the August figure of 2.625 billion. The average was from a range of 2.562 billion to 2.740 billion bushels. Ending stocks for 2006-07 were pegged at 561 million bushels from a range of 527 million to 578 million. The 2007-08 ending stocks were estimated at 217 million bushels from a range of estimates that span from 81 million to 322 million bushels.

 

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 157,152 combined soybean futures and options contracts as of Sept. 4, up from 152,234 the prior week. Traditional large speculative traders were net long 91,303 contracts compared with net longs of 84,717 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 218,901 contracts, up from the previous week's 205,583 contracts.

 

On tap for Tuesday, USDA 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.

 

The DTN Meteorlogix Weather Service forecast said cold weather expected this week in the Midwest is unfavorable for maturing summer crops but it is not expected to cause significant damage to late filling crops. Recent rainfall in the U.S. Delta may help improve the condition of any some filling crops, Meteorlogix added.

 

September soybean deliveries totaled 1,539 lots. Customer accounts at Man Professional Clearing were the primary issuer and stopper of 922 and 905 lots respectively. The last trade date assigned was September 7.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Monday, following the sharp rise at CBOT Friday. The benchmark May 2008 soybean contract settled RMB64 higher at RMB3,961 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher Monday, tracking a rise in soyoil futures on CBOT and on fresh buying support after the latest data indicated that local inventories are below 1.50 million metric tonnes, said market participants. The benchmark November contract at the Bursa Malaysia Derivative Exchange ended up MYR29 at MYR2,500/tonne after briefly touching an intraday high of MYR2,507/tonne.