December 10, 2007

 

CBOT Soy Outlook on Monday: Up 4-6 cents on technical buys, wheat, outside markets

 

 

Chicago Board of Trade soybean futures are expected to open higher, continuing the overnight theme, on technical buying, spillover strength from wheat and supportive outside market influences.

 

CBOT soybean futures are called to start the session 4 to 6 cents higher.

 

In overnight e-CBOT trading, January soybeans were 5 1/4 cents higher at US$11.25 per bushel, and March soybeans were 4 1/2 cents higher at US$11.43 1/4.

 

CBOT most active January and March futures notched new contract highs overnight.

 

Crude oil and metal futures are higher and the U.S. dollar index is lower in early action.

 

The market is poised for a firmer start, buoyed by follow-through technical buying from Friday's run to new contract highs, analysts said.

 

The supportive strength of higher outside inflationary markets should lend strength to prices, with the notion the market needs to keep pace with surging wheat futures as it fights for 2008 acres with corn and wheat seen aiding the gains as well, a CBOT floor analyst said.

 

The ability for soymeal futures to carve out new contract highs overnight, prospects of a lower carryout projection in Tuesday's supply/demand report, and dryness issues for parts of South American crop areas, are feeding bullish appetites as well, analysts said.

 

However, traders said any signs of upside exhaustion with prices at 34-year highs will attract profit taking pressure, particularly with traders squaring up some positions ahead of Tuesday's U.S. Department of Agriculture supply and demand reports.

 

A market technician said soybean bulls have the solid near-term technical advantage with still no solid technical clues that a market top is close at hand, and they gained more power on Friday. The next upside price objective for January is to push and close prices above solid resistance at US$11.50 a bushel, he said. The next downside price objective is closing prices below strong support at US$11.00, he added.

 

First resistance for January soybeans is at the contract high of US$11.21 and then at US$11.25. First support is at US$11.09 1/2 and then at Friday's low of US$11.00.

 

The DTN Meteorlogix Weather Service said Brazil's Rio Grande Do Sul region continues to trend drier, due to above normal temperatures and limited rain chances. In Argentina, the pattern continues to look drier than normal for the region, despite showers in the area early Monday, Meteorlogix added.

 

In deliveries, December soyoil deliveries totaled 1,024 lots. Issuers and stoppers were scattered among various commission houses, with the house account at ADM Investor Services a stopper of 8 lots. The last trade date assigned was Dec. 7.

 

December soymeal deliveries totaled 307 lots. Issuers and stoppers were scattered among various commission houses, with customer accounts at Man Professional Clearing the primary issuer and stopper of 178 and 145 lots respectively. The last trade date assigned was Dec. 7.

 

The Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds held net long positions totaling 182,377 combined CBOT soybean futures and options contracts as of Dec. 4, up from 179,945 the prior week. Traditional large speculative traders were net long 123,372 contracts compared with net longs of 119,937 in the previous week. Commercials held net short combined futures and options positions totaling 265,447 contracts, up from the previous week's 262,839 contracts.

 

On tap for Monday, USDA is scheduled to release its weekly export inspections report at 11:00 a.m. EST.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled sharply up Monday, as record highs on Chicago Board of Trade soybean futures Friday boosted sentiment, analysts said. The benchmark September 2008 soybean contract settled RMB72 higher at RMB4,422 a metric tonne, after trading between RMB4,380/tonne and RMB4,457/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange traded mostly lower Monday on estimates of all-time high inventories, but recovered amid prospects of floods hitting production in December, trade participants said. The benchmark February contract ended only MYR2 lower at MYR2,868/tonne, after reaching an intraday low of MYR2,843/tonne.