September 8, 2008


CBOT Soy Outlook on Monday: Up 6-10 cents, oversold, outside market support



Chicago Board of Trade soybean futures are poised to bounce in early day session action Monday, buoyed by supportive outside market influences and oversold market conditions, analysts said.


CBOT soybean futures are called 6 to 10 cents higher.


In overnight electronic trading, September soybeans were 14 1/2 cents higher at US$11.94 1/2 and November soybeans were 6 1/2 cents higher at US$11.83 1/2. December soyoil was 26 points higher at 49.15 cents per pound and December soymeal was US$1.10 lower at US$325.90 per short tonne.


The potential for some near term economic stability amid the U.S. government's takeover of mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE) has buoyed outside crude oil and precious metals markets and should generate some broad based buying in grain and oilseed futures, a CBOT floor analyst said.


The market is seen gaining a boost from ideas Friday's losses were overdone, with underlying uncertainty on the impact of hurricanes on southern Midwest and Delta harvests aiding the supportive tone as well, analysts added.


The strength in outside commodities will underpin soybeans following last week's declines, but a bounce in the U.S. dollar should limit upside potential, analysts added.


A technical analyst said the next upside price objective for November soybeans is to push and close prices above solid technical resistance at US$12.50 a bushel. The next downside price objective is pushing and closing prices below solid technical support at the May low of US$11.64 3/4.


First resistance for November soybeans is seen at US$12.00 and then at Friday's high of US$12.32. First support is seen at US$11.64 3/4 and then at US$11.50.


The DTN Meteorlogix weather forecast said cool Tuesday morning temperatures may see one or two cities dip into the upper 30s Fahrenheit. However, there is no significant risk of a crop season ending freeze for the Midwest region during the next 10 days. Rainfall associated with cold fronts favor late filling crops. Rains associated with hurricane Ike may impact the eastern Midwest during the 6-10 day period but this is highly uncertain, Meteorlogix added.


In the U.S. Delta, warmer temperatures and little rainfall during the next 5 days helps crop areas dry out after last weeks rain. However, hurricane Ike needs to be watched as this system could bring rains back to the area during the coming weekend, Meteorlogix reports.


The U.S. Department of Agriculture is scheduled to release its weekly export inspections report Monday at 11 a.m., EDT, and its weekly crop progress report at 4 p.m., EDT. USDA will release its September crop production and supply and demand forecasts Friday.


Index funds trimmed their net long CBOT soybean futures and options positions combined, which now totals 139,249 contracts as of Sept. 2, down from 140,604 the prior week, according to the Commodity Futures Trading Commission, as reported Friday in its supplemental commitment of traders report. Traditional large speculative traders were net long 41,747 contracts compared with net longs of 40,818 in the previous week. Commercials held net short combined futures and options positions totaling 150,937 contracts, down from the previous week's 153,803 contracts.


In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly a tad up Monday on short-covering, following the slide last week, and analysts said range bound trade is highly likely before the new harvest. The benchmark January 2009 soybean contract settled RMB14 higher at RMB4,126 a metric tonne.


Meanwhile, China's Ministry of Commerce cut its forecast for soybean imports in August by 18% to 2.77 million metric tonnes from 3.37 million tonnes expected earlier. The country may import 2.81 million tonnes of soybeans in September, according to details of imports of bulk commodities published on the ministry's Web site late Friday.


Crude palm oil futures on Malaysia's derivatives exchange ended almost unchanged Monday on a lack of fresh leads. The benchmark November contract on Bursa Malaysia Derivatives ended MYR1 lower at MYR2,469 a metric tonne.

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