November 1, 2007
CBOT Soy Outlook on Thursday: 6-8 cents higher on higher crude oil, palm oil
Chicago Board of Trade soybean futures are expected to begin day session trading 6-to-8 cents higher Thursday as another rally in crude oil to all-time highs and stronger palm oil futures prices in overnight trading are expected to support prices at the opening, analysts said.
In overnight e-CBOT trading, January gained 8 1/4 cents to US$10.34 per bushel. E-CBOT volume in January was 7,182 contracts.
Soybeans rallied in overnight trade on the gains in crude oil and palm oil, an analyst said. Both soybeans and soybean oil have had a close correlation with crude oil futures during this recent run up in prices, the analyst said. Crude oil set another new all-time high above US$96.00 per barrel in early trading Thursday.
Stronger palm oil futures in overnight trading is also expected to support the soy complex with soybean oil trading at 34 year highs, the analyst said. However, a stronger dollar and weaker precious metals prices might dampen buyers' enthusiasm.
Firm weekly soybean export sales might provide underlying support. The U.S. Department of Agriculture reported soybean export sales for the week ended Oct. 25 at 740,600 metric tonnes, near the upper end of the 400,000-to-800,000 tonnes expected by analysts. A trader termed the sales as "supportive."
On daily technical charts, January soybeans settled solidly higher and did make a fresh life-of-contract high on speculative buying following stronger outside markets, a technical analyst said. Market bulls have a solid near-term technical advantage. The bulls' next upside price objective is closing prices above solid resistance at US$10.50, with the next downside objective for the bears is closing prices below US$10.00.
First resistance for January soybeans is seen at US$10.33 1/2 - Wednesday's contract high - and than at US$10.40. First support is seen at Wednesday's low of US$10.14 1/2 and then at this week's low of US$10.08.
Deliveries posted against the CBOT Nov soybean future were 109 contracts Thursday. Large issuers included the customer account of RJ O'Brien which issued 32 contracts and the customer account of Credit Suisse, which issued 25 contracts. Large stoppers included the customer account of R.J. O'Brien which stopped 99 contracts. The last trade assigned was Oct. 15.
In overseas markets, crude palm oil futures ended at a record high on the Bursa Malaysia Derivative Exchange with the benchmark January contract hitting an all-time high of MYR2,959 per metric on an intraday basis and ending MYR50 higher at MYR2,930/tonne.
In other soybean news, soybean futures on China's Dalian Commodities Exchange settled higher on surging domestic cash prices, analysts said. The benchmark May 2008 contract settled RMB23 higher at RMB4,406 per metric tonne.
Thursday afternoon, FCStone is scheduled to release its updated forecast on soybean production and yields after the close of trading.