September 22, 2008

 

CBOT Soy Outlook on Monday: Up 30-35 cents, inflationary signals buoy market

 

 

Inflationary signals are poised to generate broad-based buying in commodities Monday, propelling Chicago Board of Trade soybean futures to a sharply higher start, analysts said.

 

CBOT soybean futures are called 30 to 35 cents higher.

 

In overnight electronic trading, November soybeans were 32 1/4 cents higher at US$11.75 3/4. December soyoil was 76 points higher at 48.16 cents per pound and December soymeal was US$9.50 higher at US$325.00 per short tonne.

 

General relief buying amid signs of stability in financial markets sets the stage for a continuation of the firmer overnight theme, said Don Roose, president of U.S. Commodities.

 

"The infusion of capital into financial sectors by the U.S. government sends inflationary signals to the market place, Roose said. As paper money becomes worth less, people want to hold hard assets, and that's supportive to commodities," Roose said.

 

The soy complex is poised to find direction from outside influences, with fundamentals staying on the back burner until the turmoil in financial markets subsides.

 

Crude oil futures are up nearly US$2.00 a barrel, gold futures are US$21.00 an ounce higher and the U.S. dollar index in lower in early action.

 

Crude oil is linked to soybeans because funds often trade commodities in a basket and because biodiesel is made from soyoil.

 

However, tight balance sheet tables and some long-range weather outlooks from private weather forecasts pointing to a colder temperatures and possibly a freeze by Oct. 1, should lend fundamental support, 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 the August low of US$11.68 a bushel. The next downside price objective is pushing and closing prices below major psychological support at US$11.00.

 

First resistance for November soybeans is seen at Friday's high of US$11.57 3/4 and then at US$11.68. First support is seen at US$11.25 and then at Friday's low of US$11.17.

 

The DTN Meteorlogix weather forecast said warm temperatures and only light showers favor maturing soybeans through next Sunday. After that, the weather is a little more uncertain. Meteorlogix anticipates cooler and a little bit wetter weather for early next week, somewhat unfavorable for maturing crops.

 

In the U.S. Delta, drier, warmer weather during the next seven days will favor soybean harvests.

 

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.

 

Traditional large speculative traders cut their net long positions in CBOT soybean futures and options combined contracts, which now total 17,707 contracts as of Sept. 16, compared with net longs of 23,169 in the previous week. Index funds trimmed their net long positions, which now total 138,718 contracts, up from 135,592 the prior week, according to the Commodity Futures Trading Commission, as reported Friday in its supplemental commitment of traders report. Commercials held net short combined futures and options positions totaling 123,832 contracts, down from the previous week's 126,631 contracts.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled sharply higher Monday, in line with Friday's big gains on CBOT. The benchmark January 2009 soybean contract settled RMB139 or 3.6% higher at RMB3,969 a metric tonne. China's soybean imports in August rose 31% on year to 3.83 million metric tonnes, the General Administration of Customs said Monday. In the January-August period, soybean imports rose 24% to 24.56 million tonnes.

 

Crude palm oil futures on Malaysia's derivatives exchanged ended higher for the third straight trading day Monday as buyers in the cash market continued to lock in purchases and there was spillover support from soybean oil and crude. The benchmark December contract on the Bursa Malaysia Derivatives ended MYR85 higher at MYR2,344 a metric tonne.
   

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