November 7, 2007

 

CBOT Soy Outlook on Wednesday: Up; inflationary signals buoy prices again

 

 

Soybean futures on the Chicago Board of Trade is seen starting Wednesday's day session higher, continuing its uptrend on the bullish influence of outside inflationary markets.

 

The U.S. dollar index is lower, crude oil soared to more than US$98 per barrel and metal futures are sharply higher.

 

CBOT soybean futures are called to start the session 6 to 8 cents higher.

 

In overnight e-CBOT trading, November soybeans were 8 1/2 cents higher at US$10.38 per bushel, and January soybeans were 7 1/4 cents higher at US$10.51 3/4.

 

The combination of the dollar weakness and strength in outside markets is expected to lead to active buying in the inflationary and grain and oilseed markets, promoting higher opening calls for Wednesday morning's trade as long as the financial markets don't experience too sharp of losses, said Farm Futures analyst Arlan Suderman in a morning market report.

 

The recent trend of following outside markets is in place once again, with technical strength and advances in soyoil amid spillover from crude oil and Malaysian palm oil adding to the upward tone, analysts said. A quiet news front will keep attention on inflationary factors, as traders await fresh fundamental data in Friday's crop reports, analysts added.

 

A technical analyst said market bulls have the solid near term technical advantage and gained more power Tuesday. The next upside price objective for January soybeans is to push and close prices above solid technical resistance at US$10.50. The next downside price objective is closing prices below strong support at US$10.25, which is the bottom of Tuesday's upside price gap on the daily bar chart.

 

First resistance for January soybeans is seen at Tuesday's contract high of US$10.47 1/2 and then at US$10.50. First support is seen at Tuesday's low of US$10.37 and then at US$10.25.

 

November soybean deliveries totaled 98 lots. A customer account at RJ O'Brien issued all 98 lots, with the house account at Rosenthal Collins LLC the primary stopper of 83 lots. The last trade date assigned was October 26.

 

The U.S. Department of Agriculture is scheduled to release its final crop production report of year based off conditions as of Nov. 1, Friday. The average of analysts estimates from a Dow Jones Newswires survey peg U.S. soybean production at 2.606 billion bushels with a yield of 41.5 bushels an acre. The estimates are slightly above October USDA projections of 2.598 bushels with a yield of 41.4 bushels an acre. The average of estimates for the 2007-08 carryout is 213 million bushels, down slightly from the October USDA estimate of 215 million.

 

In other news, Argentine President Nestor Kirchner's administration Wednesday raised export taxes on soy, wheat, and corn, a move expected as the government moves to add revenues to state coffers. The government lifted the export tax on soy to 35% from 27.5%, the tax on wheat to 28% from 20%, and the tax on corn to 25% from 20%.

 

Meanwhile, Argentina has closed the soybean, soymeal and soyoil export registry in anticipation of the increase in the export tax on grains, according to local press reports. New crop export commitments had soared to unprecedented levels as fears of an imminent increase in the export tax spurred exporters to rush to declare new-crop soybean export commitments to lock in a reference price and tax rate.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled at record highs Wednesday, after the country's think tank lowered its production forecast for 2007 yet again. The benchmark May 2008 soybean contract settled RMB68 higher at RMB4,530 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange broke the MYR3,000-a-metric-tonne mark for the first time ever and ended at a record high level Wednesday, driven by high soyoil and crude oil prices, market participants said. The benchmark January CPO contract on Bursa Malaysia Derivatives ended MYR40 higher at MYR3,000/tonne after reaching an intraday high of MYR3,009/tonne.