November 6, 2007

 

CBOT Soy Outlook on Tuesday: Seen up on bullish outside market influences

 

 

Chicago Board of Trade soybean futures are expected to start Tuesday's day session on firm footing, supported by the bullish influence of outside inflationary markets.

 

The U.S. dollar index is lower and crude oil and metal futures are sharply higher.

 

CBOT soybean futures are called to start the session 10 to 15 cents higher.

 

In overnight e-CBOT trading, November soybeans were 15 1/2 cents higher at US$10.21 1/4 per bushel, and January soybeans were 15 cents higher at US$10.36.

 

The combination of the U.S. dollar dropping to record lows, crude oil futures spiking to new all-time highs and metal futures trading sharply higher should attract speculative buying to firmly underpin prices, analysts said.

 

The market surged to new contract highs overnight and expected price support from soyoil amid crude oil strength and new record highs in Malaysian palm oil will lend strength, analysts added.

 

A quiet news front and the absence of fresh fundamental influences continue to keep outside inflationary markets directing prices, a CBOT floor broker said. Technical strength adds to the bullish equation, with traders encouraged by the market's ability to bounce back from early losses Monday, he added.

 

A technical analyst said market bulls still have the near term technical advantage. The next upside price objective for January soybeans is to push and close prices above solid technical resistance at the contract high of US$10.33 1/2. The next downside price objective is closing prices below strong support at last week's low of US$9.94.

 

First resistance for January soybeans is seen at Monday's high of US$10.25 and then at US$10.33 1/2. First support is seen at Monday's low of US$10.08 and then at US$10.00.

 

Meanwhile, U.S. Department of Agriculture reported that 92% of the U.S. crop was harvested as of Sunday, within the 88% to 95% expected by analysts, and higher than the 90% harvested in 2006 and the five-year average of 90%.

 

In Iowa, 96% of the crop has been harvested, compared to 97% last year and the 99% average. In Illinois, 98% of the crop has been combined, above the 95% five-year average. In Minnesota, 97% of the crop was reported cut, in line with the average of 97%. In Indiana, the harvest was 96% finished, compared to 84% in 2006 and the average of 92%.

 

Harvest progress was right in the middle of expectations and in the main states much of the crop has been harvested, and the rest of the crop should be cut without any remaining problems, said Brian Hoops, president Midwest Market Solutions.

 

November soybean deliveries totaled 7 lots. A customer account at RJ O'Brien issued all 7 lots, with the house account at Rosenthal Collins LLC stopping the 7 lots. The last trade date assigned was October 22.

 

The DTN Meteorlogix Weather Service forecast said rainfall and soil moisture favors early growth of soybeans in all areas with the exception of the western Bahia crop region.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday despite the government's intention to curb rising vegetable oil prices. The benchmark May 2008 soybean contract settled RMB43 higher at 4,462 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended at a record high level Tuesday in lackluster trade, taking cues from higher soyoil and crude oil prices, market participants said. The benchmark January CPO contract on Bursa Malaysia Derivatives ended MYR30 higher at the intraday high of MYR2,960 a metric tonne.