October 30, 2006

  

CBOT Soy Outlook on Monday: Up 4-6 cents; e-CBOT, bullish technical momentum

  

 

Soybean futures on the Chicago Board of Trade are seen starting Monday's day session higher, taking its lead from overnight action with technical momentum expected to remain a key driver of prices.

 

Soybean futures are called to open 4 to 6 cents higher.

 

In e-CBOT trade, November soybeans were 5 cents higher at US$6.40 1/2 and January was 4 1/2 cents higher at US$6.53 1/2 per bushel.

 

Most active contracts climbed to more highs and the January future propelled to a new contract high in overnight action.

 

Bullish technical momentum continues to overshadow the market's underlying fundamentals, as soybean's recent technical breakout to the upside inspires speculative buyers to add length, analysts said.

 

A technical analyst said the market has a solid upside technical advantage following Friday's weekly high close and fresh contract high close. The next upside price objective is to close prices above solid chart resistance at the contract high of US$6.55 basis January futures. The next downside price objective is closing prices below solid support at US$6.25.

 

First resistance for January soybeans is seen at US$6.50 and then at US$6.55. First support is seen at Friday's low of US$6.44 1/4 and then at US$6.40.

 

Meanwhile, futures remain overbought and due for a correction, but with a market perception that soybeans remain under priced in comparison to the price levels of corn and wheat, sellers remain hesitant to step in front of the bullish theme, analysts added.

 

The DTN Meteorlogix weather forecast says wet conditions over the eastern Midwest will keep harvest progress moving slowly early this week, but it should improve over the course of the week. Next week's weather may again become wet in the eastern areas.

 

Commodity Futures Trading Commission on Friday reported large speculative traders were net long 26,840 combined soybean futures and options contracts as of Oct. 24, compared with net longs of 2,451 in the previous week. Speculative funds were reported net long soyoil futures and options to tune of 33,292 lots, compared with net longs of 6.706 lots in the prior week. Large speculative traders were reported net long combined futures and options positions in soymeal by 4,948 lots, compared with net shorts of 934 contracts last week.

 

On tap for Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspection 10 a.m. CST and crop progress reports at 3:00 p.m. CST.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Monday. Spot cash soybean bids were up 3 cents in Peoria, Ill., and down 4 cents in St. Louis, Mo., according to cash sources Monday.

 

Rotterdam soybeans and soymeal were mostly higher. European vegoils were higher.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled up Monday, supported by fresh speculative buying, analysts said. The most active May 2007 contract rose RMB46 to settle at RMB2,823 a metric tonne, after trading between RMB2,789/tonne and RMB2,844/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Monday in busy trading as the market continued an uptrend fueled mainly by the strength of rival soyoil, analysts said. The benchmark January contract ended at MYR1,698 a metric tonne, up MYR18.