October 13, 2008

 

CBOT Soy Outlook on Monday: Seen up 14-16 cents on firm outside markets

 

 

Chicago Board of Trade soybean futures are expected to start higher Monday as the market rebounds amid supportive signals from outside and financial markets.

 

CBOT November soybeans are called to open 14 to 16 cents per bushel higher. In overnight electronic trading, CBOT November soybeans jumped 15 cents to US$9.25 per bushel.

 

The daily trading limit for soybeans is temporarily expanded to US$1.05 after prices sank the normal limit of 70 cents Friday amid turmoil in global financial markets. Limits are expanded to US$30 from US$20 for soybean meal and to 350 points to 250 points for soybean oil, according to the CBOT.

 

Soybeans should bounce Monday as financial markets are firmer and there is less of the "sense of panic and doom that pervaded Friday," said Dennis Gartman, publisher of the Gartman Letter. Strength in crude oil is seen as another supportive factor, as funds often trade in a basket of commodities.

 

"The outside markets are starting on a strong note," said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage. "We will be anxiously watching to see if that can hold all day."

 

A bearish crop report issued by the U.S. Department of Agriculture on Friday continues to hang over the market, analysts said. The market was "really shocked" when the USDA said it had found another 2.2 million acres of soybeans since its September report, Pfitzenmaier said.

 

The USDA pegged 2008-09 soybean production at 2.983 billion bushels, up from its September estimate of 2.934 billion. Analysts had expected to see a crop of about 2.920 billion.

 

FuturesTechs said the overnight strength in soybeans "would be classed as a selling opportunity." There is a gap about November soybeans at US$9.62 1/2, the firm said. Below the overnight low of US$8.81 1/2, the next target is around US$8.29 1/2, it said.

 

"Prices are still in a three-month-old downtrend on the daily bar chart," a technical analyst said.

 

The next upside price objective for the bean bulls is to push and close November soybeans above major psychological resistance at US$10.00, the technical analyst said. The next downside price objective for the bears is pushing and closing prices below major solid technical support at last week's low of US$9.11, he said.

 

First resistance for November soybeans is seen at Friday's high of US$9.35 and then at US$9.50. First support is seen at US$9.25 and then at US$9.11.

 

Looking at the weather, rains through far western and northwestern areas of the Midwest early this week will likely slow harvest progress, DTN Meteorlogix said in a forecast. Otherwise, favorable weather is expected for maturing crops and harvests elsewhere in the region, the private weather firm said.

 

In other news, crude palm oil futures on Malaysia's derivatives exchange rose 3.5% Monday. The market recovered from some of last week's losses on an increase in the CPO export quota and spillover support from both soyoil and crude oil, trade participants said.
   

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