September 24, 2007

 

CBOT Soy Outlook on Monday: Up 2-4 cents; bullish theme remains intact

 

 

Chicago Board of Trade soybean futures are poised for a higher start to Monday's day session, fueled by a bullish trend, with inflationary fears and supportive underlying fundamentals buoying the market, analysts said.

 

CBOT soybean futures are called to start the session 2 to 4 cents higher.

 

In overnight e-CBOT trading, November soybeans were 2 cents higher at US$9.81, and January soybeans were 3 1/2 cents higher at US$9.98.

 

The higher overnight theme is expected to influence the opening, with supportive technicals, higher metals markets, a weaker U.S. dollar, strong demand outlooks and lingering concerns about dryness issues in Brazil's largest soybean state underpinning prices, analysts said.

 

Spillover strength from higher wheat futures, the need to buy global soybean acres and expected strength from soyoil amid sharp overnight gains in Malaysian palm oil futures are lending support as well, analysts added.

 

However, good weekend U.S. harvest progress and overbought conditions are seen applying mild pressure to limit advances, traders said.

 

A technical analyst said prices are still in a steep uptrend from the August low, with no strong technical signs of a market top being in place. The next upside price objective for November soybeans is to push and close prices above major psychological resistance at US$10.00 a bushel. The next downside price objective is closing prices below support at last week's low of US$9.53.

 

First resistance for November soybeans is seen at Friday's high of US$9.89 1/2 and then at the contract high of US$9.96 1/2. First support is seen at Friday's low of US$9.78 and then at US$9.72 - the bottom of last week's upside price gap on the daily chart.

 

The DTN Meteorlogix Weather Service forecast said heavy storms have been reported through Rio Grande Do Sul crop areas during the weekend, possibly causing some flooding. Mato Grosso continued to be hot and dry.

 

Any significant rainfall during the next 7-10 days will be confined to Rio Grande do Sul and southern Parana. Hot dry weather will continue over central Brazil. There is no sign of any significant rainfall developing in northern Mato Grosso until possibly the latter part of the first week of October.

 

The Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that traditional large speculative traders were net long 105,752 contracts compared with net longs of 94,082 in the previous week. Index funds were reported to hold net long positions totaling 157,775 combined soybean futures and options contracts as of Sept. 18, down from 158,969 the prior week. Commercials were reported to hold net short combined futures and options positions totaling 230,712 contracts, up from the previous week's 220,484 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, China is likely to import more soybeans and soyoil in the coming months due to rising domestic demand, analysts said. A high volume of chickens, ducks and hens as well as an expected recovery in pig volumes on farms, after a fall following an outbreak of blue ear disease, will continue to spur demand for feedmeal, especially soymeal, said Xia Tian, an analyst at Yongan Futures. In August, China imported 2.93 million metric tonnes of soybeans and 263,094 tonnes of soyoil, down 3% on year and up 316.5% on year respectively, the General Administration of Customs said Monday.

 

Meanwhile, China will provide RMB1.3 billion in subsidies to people involved in oilseeds planting to encourage them to develop better types of soybeans and rapeseeds, in a bid to boost production, the official Xinhua News Agency reported late Sunday, citing the Ministry of Agriculture.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly lower Monday, after the government said it will release grains and vegetable oils from state reserves to stabilize volatile food prices. The benchmark May 2008 soybean contract settled RMB39 lower at RMB4,068 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended sharply higher Monday on a positive export outlook, brisk buying and a bullish price forecast, market participants said. The benchmark December contract at the Bursa Malaysia Derivatives ended MYR69 higher at MYR2,675 a metric tonne.