October 29, 2007

 

CBOT Soy Outlook on Monday: Up on outside markets, options related buys

 

 

Soybean futures on the Chicago Board of Trade are seen starting Monday's day session firmer, continuing its counter seasonal rally, as the bullish influence of outside markets underpin prices, analysts said.

 

CBOT soybean futures are called to start the session 9 to 12 cents higher.

 

In overnight e-CBOT trading, November soybeans were 12 1/4 cents higher at US$10.07 3/4 per bushel, and January soybeans were 11 3/4 cents higher at US$10.25.

 

An overnight slide to new lows in the U.S. dollar, coupled with a rally to new all-time highs in crude oil and palm oil futures is expected to attract speculative buyers and keep futures in an uptrend, analysts said.

 

Meanwhile, options related buying is expected to add further strength to prices, traders added. CBOT reported 3,500 November US$10.00 soybean call options were exercised Friday.

 

The exercising of the calls that were out of the money by 4 1/2 cents as of Friday's close should entice the sellers of the calls to cover shorts in futures amid the overnight rise to the US$10.00 strike price moving 7 3/4 cents in the money as of the overnight session's suspension of trading, said Vic Lespinasse, analyst with Illinois Grain.

 

A technical analyst said market bulls have the near-term technical advantage, with the next upside price objective for January soybeans to push and close prices above solid technical resistance at last week's high of US$10.25. The next downside price objective is closing prices below solid support at last week's low of US$9.80.

 

First resistance for January soybeans is seen at Friday's high of US$10.25 and then at the contract high of US$10.33. First support is seen at Friday's low of US$10.12 and then at US$10.00.

 

A quiet news front is expected to keep inflationary factors in play, as aggressive selling remains idle in the face of bullish speculative momentum in the market, a CBOT floor analyst added.

 

Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds held net long positions totaling 168,731 combined CBOT soybean futures and options contracts as of Oct. 23, up from 166,146 the prior week. Traditional large speculative traders were net long 117,232 contracts compared with net longs of 114,687 in the previous week. Commercials held net short combined futures and options positions totaling 245,508 contracts, up from the previous week's 242,458 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.

 

The DTN Meteorlogix Weather Service forecast said mostly favorable weather is on tap for the remaining U.S. corn and soybean harvests.

 

In Brazil, weather conditions this week look to be drier and somewhat warmer. More rain will be needed to ensure favorable development of this part of the soybean crop. The new soybean areas of western Bahia Brazil look to remain drier and much warmer than normal during the week, Meteorlogix forecasts.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Monday on the strong debut of palm oil futures. The benchmark May 2008 soybean contract settled RMB68 higher at 4,441 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange rose sharply for the second straight trading day to end at yet another record high Monday on support from China and firm crude oil and soyoil prices, said market participants. The benchmark January CPO contract on Bursa Malaysia Derivatives ended MYR110 higher at MYR2,910 a metric tonne after reaching an all-time intraday high of MYR2,920/tonne.