September 17, 2007

 

CBOT Soy Outlook on Monday: Seen up 15-17 cents on fears of crop losses

 

 

Chicago Board of Trade soybean futures are seen starting Monday's day session higher, bolstered by fears of crop losses attributed to a weekend frost in the upper Midwest.

 

CBOT soybean futures are called to start the session 15 to 17 cents higher.

 

In overnight e-CBOT trading, November soybeans were 16 1/2 cents higher at US$9.71 1/4, and January soybeans were 17 cents higher at US$9.86 1/4.

 

The weekend frost was more widespread than forecasted Friday, leaving late maturing crops in the upper Midwest susceptible to field losses, analysts said. The frost raised concerns for future production cuts by the U.S. Department of Agriculture amid growing global demand, analysts added.

 

The market is poised to add some risk premium, with the need to buy acres in South America and in the U.S. next spring as well as raise prices to levels that will ration demand, bullish underlying themes, a CBOT floor analyst said.

 

Active futures climbed to new contract highs overnight, with the nearby November contract rising to its highest point since 2004.

 

A market technician said bulls gained better upside technical momentum Friday. Their next upside price objective is to produce a close above the contract high of US$9.59 1/2 basis the November future. The next downside price objective for the bears is closing prices below support at US$9.20.

 

First resistance for November soybeans is seen at US$9.59 1/2 and then at US$9.70. First support is seen at US$9.50 and then at Friday's low of US$9.43.

 

The DTN Meteorlogix Weather Service forecast said cold weather on Saturday morning produced lows in the low to middle 30s over much of the western Midwest with a few reports of 28 degrees over north-central Iowa and southwest Minnesota. The outlook during the next seven days generally looks favorable for crop maturation and harvest with the only significant rainfall of the week confined to the western Midwest on Tuesday.

 

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 158,969 combined soybean futures and options contracts as of Sept. 11, up from 157,152 the prior week. Traditional large speculative traders were net long 94,082 contracts compared with net longs of 91,303 in the previous week. Commercials were reported to hold net short combined futures and options positions totaling 220,484 contracts, up from the previous week's 218,901 contracts.

 

On tap for Monday, USDA is scheduled to release its weekly export inspections report at 11:00 a.m. EDT and weekly crop progress reports at 4:00 p.m. EDT.

 

In other news, pest infestation has been reported in some soybean crops in Madhya Pradesh, India's largest soybean-growing province, but provincial government officials Monday said the infestation isn't likely to lower output, as the government has taken action to stem the infestation.

 

Meanwhile, global soybean prices will stay high in the coming year as acreage growth is unlikely to catch up with increasing demand, according to participants at China's Autumn Grain and Oils Market Analysis Conference.

 

China's soy oil imports in August reached 260,000 metric tonnes, preliminary data provided by the General Administration of Customs showed Monday. Total soy oil imports in January-August surged by 74% on year to 1.6 million tonnes, it said, without providing the on-year change for August alone.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly up sharply Monday on continued worries that unfavorable weather conditions might further affect output this year, analysts said. The benchmark May 2008 soybean contract settled RMB91 higher at RMB4,125 a metric tonne, after trading between RMB4,085/tonne and RMB4,156/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange swung sharply in volatile trading to end higher Monday, but were off highs as profit-taking emerged, market participants said. The benchmark December contract traded on BMD ended MYR12 higher at MYR2,590/tonne, after reaching an intraday high of MYR2,619/tonne in the morning session.