December 17, 2007

 

CBOT Soy Outlook on Monday: Up 6-8 cents; demand, wheat spillover, bolsters

 

 

Chicago Board of Trade soybean futures are seen starting Monday's day session higher, fueled by overnight price strength, with good underlying demand, worries over tightening supplies and spillover from wheat supportive features.

 

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

 

In overnight e-CBOT trading, January soybeans were 6 cents higher at US$11.63 per bushel, and March soybeans were 6 1/2 cents higher at US$11.81 1/2.

 

The market remains energized by longer term bullish fundamental outlooks, with dryness concerns for parts of Brazil and Argentina adding to the mix, analysts said.

 

A strong technical picture is helping keep prices in an upward trend, with weakness in outside inflationary markets overshadowed as sellers remain reluctant to stand in the way of the advances, analysts added.

 

Spillover strength from a surge in wheat futures to new all-time highs will benefit the upward move, as traders expect soybeans keep pace amid its need to remain competitive in the battle for acres in the spring, traders added.

 

A market technician said the next upside price objective for March soybeans is to push and close prices above major psychological resistance at US$12.00 a bushel. The next downside price objective is closing prices below chart support at US$11.50.

 

First resistance for March soybeans is seen at the contract high of US$11.83 and then at US$11.90. First support is seen at Friday's low of US$11.63 and then at US$11.5.

 

The DTN Meteorlogix Weather Service said Brazil's Rio Grande do Sul region bears watching long range, as it could be drier and warmer than normal.

 

In Argentina, last week's rain and cooler weekend temperatures helped improve conditions for crops, Meteorlogix said. However, western crop areas could still use more rain. The pattern favors periodic very hot temperatures, but there is also some chance for thunderstorms at times. These thunderstorms chances are important to help crops through the periods of heat, Meteorlogix added.

 

Commodity Futures Trading Commission on Friday reported in its supplemental commitment of traders report that index funds held net long positions totaling 183,645 combined CBOT soybean futures and options contracts as of Dec. 11, up from 182,377 the prior week. Traditional large speculative traders were net long 137,780 contracts compared with net longs of 123,372 in the previous week. Commercials held net short combined futures and options positions totaling 283,824 contracts, up from the previous week's 265,447 contracts.

 

On tap for Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11:00 a.m. EST.

 

In other news, China imported 340,000 metric tonnes of soy oil in November, preliminary data provided by the General Administration of Customs showed Monday. Total imports in January-November almost doubled on year to 2.56 million tonnes, it said. The customs department will provide a detailed breakdown on Dec. 24.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Monday, as CBOT soybean futures hit new contract highs Friday, analysts said. The benchmark September 2008 soybean contract settled at RMB4,526 a metric tonne, up 1.2% from Friday's settlement.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher Monday on forecasts of a fall in Malaysia's palm oil output and estimates of a rise in exports. The benchmark March contract on Bursa Malaysia Derivatives ended MYR45 higher at the intraday high of MYR2,975/tonne.