January 2, 2008

 

CBOT Soy Outlook on Wednesday: Higher; speculative buys; South America weather, outsides

 

 

Soybean futures on the Chicago Board of Trade are seen starting Wednesday's day session sharply higher, rallying on speculative buys amid Argentine weather concerns and bullish outside market influences, analysts said.

 

CBOT soybean futures are called to start the session 20 to 25 cents higher.

 

In overnight e-CBOT trading, January soybeans were 22 1/4 cents higher at US$12.21 1/4 per bushel, and March soybeans were 25 3/4 cents higher at US$12.40.

 

A dry forecast for Argentine growing areas, with no meaningful rains forecast until the middle of next week - coupled with sharply higher outside inflationary markets - should attract speculative fund buying to keep prices trending higher, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

The market has not shown any signs of demand rationing and with the weather concerns for Argentina, traders are expected to continue to add risk premium to prices, he added.

 

The market is targeting its all-time high of US$12.90 per bushel as a near term upside objective and without any fresh bearish news to derail the bullish tone, sellers remain unwilling to stand in the way of the upward assault, analysts added.

 

Despite the high prices, traders are looking to buy into the market ahead of an expected influx of speculative money rolling into the market when index funds reallocate fresh capital into commodities in 2008, a CBOT floor broker added.

 

The DTN Meteorlogix Weather Service said it is still a difficult weather pattern to describe for the central agricultural belt of Argentina. Argentina's main corn, soybean and wheat areas will have periods when it is fairly hot and periods when there is the promise of thunderstorms, Meteorlogix said. There is at least some risk to crops where the rainfall is the lowest and temperatures the highest, they added.

 

In Brazil, periodic shower activity and warm temperatures will favor developing soybeans during the next week to 10 days, Meteorlogix forecasts.

 

In deliveries, January soybean deliveries totaled 429 lots. The house account at Term Commodities issued 335 lots, and the house account at ADM Investor Services issued 42 lots. Stoppers were scattered among various commission houses. The last trade date assigned was Dec. 20.

 

January soyoil deliveries totaled 6,423 lots. Customer accounts at Man Professional Clearing issued and stopped 2,508 and 2,413 lots, respectively. The house account at FCStone issued 159 lots. The last trade date assigned was Dec. 31.

 

January soymeal deliveries totaled 1,572 lots. A customer account at Citigroup Global Markets Inc. was the primary issuer of 898 lots. A customer account at Man Professional Clearing was the primary stopper of 1,206 lots. The last trade date assigned was Dec. 28.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mixed Wednesday, pressured by the government's measures to curb grain exports. The benchmark September 2008 soybean contract settled RMB6 higher at RMB4,692 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher Wednesday on prospects of renewed flooding in oil palm areas, strong exports, as well as cues from stronger soyoil and crude oil futures, traders said. The benchmark March contract on Bursa Malaysia Derivatives ended MYR32 higher at MYR3,082/tonne after reaching an intraday high of MYR3,097/tonne.