October 15, 2007

 

CBOT Soy Outlook on Monday: Up 7-9 cents; outside inflationary forces

 

 

Chicago Board of Trade soybean futures are pegged to start Monday's day session higher, supported by broad-based strength in world commodity markets, analysts said.

 

CBOT soybean futures are called to start the session 7 to 9 cents higher.

 

In overnight e-CBOT trading, November soybeans were 9 1/2 cents higher at US$9.86 1/4 per bushel, and January gained 7 1/2 higher cents to US$10.02 3/4.

 

"Overnight indicators are pointing to a firmer opening, with strength in outside inflationary markets amid weakness in the U.S. dollar serving as the catalyst to inspire speculative buying," a CBOT floor analyst said.

 

The strength seen across global commodity markets set the tone for the higher start, with bullish underlying fundamentals surrounding tightening domestic supplies and strong global demand remain underpinning features, analysts said.

 

The potential for harvest delays in the Midwest this week and a higher-than-expected monthly crush report is seen aiding the higher tone as well, analysts added.

 

A technical analyst said market bulls still have some upside near-term technical momentum on their side, but are a bit worried that price action on Friday could not see gains despite a bullish U.S. Department of Agriculture report issued Friday morning. The next upside price objective for November soybeans is to close prices above major psychological resistance at US$10.00. The next downside price objective is closing prices below solid support at US$9.50.

 

First resistance for November soybeans is seen at US$9.79 and then at US$9.85. First support is seen at Friday's low of US$9.74 and then at US$9.63.

 

The National Oilseed Processors Association said Monday its September soybean crush rate was 139.8 million bushels. That was up from the August figure of 137.6 million bushels and above the 137.3 million at the same period last year. The average of estimates from analysts surveyed by Dow Jones Newswires was 136.7 million. Soyoil stocks were reported at 2.561 billion pounds. The stocks were down from the August stock figure of 2.701 billion, and below the average of estimates at 2.589 billion.

 

The DTN Meteorlogix Weather Service forecast said wet or very wet weather is on tap for the western Midwest this week, likely meaning delays and disruptions to corn and soybean harvests.

 

Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that traditional large speculative traders were net long 114,295 CBOT soybean contracts compared with net longs of 107,234 in the previous week. Index funds held net long positions totaling 159,289 combined soybean futures and options contracts as of Oct. 9, down from 159,336 the prior week. Commercials held net short combined futures and options positions totaling 231,092 contracts, up from the previous week's 224,678 contracts.

 

On tap for Monday, U.S. Department of Agriculture 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, Brazil-based agribusiness consultancy, AgRural, lowered its soy planting intentions estimate for 2007-08 by 1% to 22.5 million hectares this month, compared to 22.8 million hectares in its last estimate. By comparison, Brazil planted 21.3 million hectares in the 2006-07 soy season.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Monday on increasing demand for domestic soybeans. The benchmark May 2008 soybean contract settled RMB44 higher at RMB4,230 a metric tonne.