November 26, 2007

 

CBOT Soy Outlook on Monday: 8-12 cents higher on outside markets, dollar weakness

 

 

Chicago Board of Trade soybean futures are expected to open 8-to-12 cents higher Monday as stronger outside markets in overnight activity, a weaker dollar and follow through from strong gains posted on Friday are expected to underpin prices at the opening, an analyst said.

 

In overnight e-CBOT trading, January rallied 11 1/2 cents to US$11.11 3/4 per bushel. e-CBOT volume in January was 6,552 contracts.

 

The market was higher overnight continuing the rally from Friday and gold and silver are stronger while the dollar is weaker, which are all supportive, an analyst said. Crude oil is lower, but recent demand for soybeans has been strong and prices need to remain higher to encourage increased acreage this spring, the analyst added.

 

Although the market rallied to 34-year highs on Friday on a continuous chart basis, price direction will be determined by what the outside inflationary markets do, a trader said. Crude oil is lower and metals, while higher, are off from their highs. If the outside markets turn weaker, soybeans will struggle to trade higher, the trader said.

 

Warmer and drier weather this week is expected to favor the early growth of soybeans in Brazil, DTN Meteorlogix Weather said. In Argentina, drier weather will begin to reduce soil moisture for crops, the weather service reported.

 

On daily technical charts, January soybeans gapped open higher and hit a fresh contract high Friday and bulls have solid near term technical momentum, a market technician said.

 

The next major upside price objective is to push and close prices above US$11.50 per bushel, while the next downside price objective is closing prices below strong support at US$10.86 which is the bottom of Friday's upside price gap on the daily bar chart.

 

First resistance is seen at Friday's contract high of US$11.03 and then at US$11.10. First support is seen at US$10.90 1/2 and then at US$10.86.

 

In overseas markets, crude palm oil futures ended lower after February reached a new all-time high earlier in the session. The benchmark February contract on the Bursa Malaysia Derivative Exchange ended down MYR6 lower at MYR3,038/tonne.

 

In other soybean news, soybean futures on China's Dalian Commodities Exchange settled higher following Friday's rally to 34-year highs in CBOT futures. The benchmark September 2008 contract jumped RMB61 higher at RMB4,488 per metric tonne.

 

The U.S. Department of Agriculture is scheduled to release the weekly export inspections report is at 11:00 EST.