November 24, 2008
CBOT Soy Outlook on Monday: Up on follow-through; bailout supports
Chicago Board of Trade soybean futures are poised to open higher Monday following overnight gains and bullish outside markets, which are expected to be supported by the U.S. government's latest bailout plans.
Soybeans are called 18 to 20 cents higher. In overnight trading, January soybeans were up 21 1/2 cents to US$8.61 1/2 per bushel and March soybeans were up 21 3/4 cents to US$8.69.
January soymeal climbed US$3.90 to US$254.40 per short tonne and January soyoil climbed 92 points to 31.98 cents per pound.
News of a government bailout of Citigroup Inc. is giving Wall Street more confidence Monday morning, said Arlan Suderman, analyst for Farm Futures. Traders and analysts said soybean prices were supported overnight by big gains in the U.S. stock market Friday, which came after the grains and oilseeds markets closed.
The market has had little direction of its own recently, traders said, although from a demand standpoint "soybeans have the demand story of the three major grains right now," Suderman said, with buying from China supporting the market.
Traders and analysts said volume will be relatively low this week because of the Thanksgiving holiday on Thursday. Suderman said there could be significant price swings as a result. Rallies will be difficult to sustain, he added. Adverse conditions in South America, particularly Argentina, could be providing some support, Suderman said. DTN Meteorlogix said there will be showers in parts of Argentina this week. Crops there are under stress due to very hot and dry weather recently. DTN Meteorlogix said the overall drier weather pattern "may return next week but this is somewhat uncertain."
Suderman said the weather in Argentina is a factor, although as of yet not a large factor in the market.
"It was limiting selling interest last week, and I would say it would increase buying interest this week," Suderman said.
On Friday, January soybeans closed near the session low and hit a fresh 18-month low, with a downside "breakout" from a sideways trading range, a technical analyst said.
The next upside price objective for bulls is to push and close prices above psychological resistance at US$9.00 a bushel, the technical analyst said. The next downside price objective for the bears is pushing and closing prices below psychological support at US$8.00.
In other markets, crude palm oil futures on Malaysia's derivatives exchange ended higher Monday, tracking soyoil gains and price-supportive news that six Malaysian palm oil companies plan to start replanting 200,000 hectares of oil palm trees immediately, trade participants said Monday.
The benchmark February contract on the Bursa Malaysia Derivatives ended 28 Malaysian ringgit (US$7.75) higher, at MYR1,488 a metric tonne, not far off the intraday high of MYR1,503 a tonne.
Speculative funds added 857 contracts to their CBOT soybean long positions and one contract to their short positions, putting them net long 9,885 contracts, the Commodity Futures Trading Commission reported Friday.
The supplemental commitment of traders report also showed commercial funds cut their long positions by 203 contracts and their short positions by 2,012 contracts, putting them net short 89,028 contracts. Index funds cut 2,585 contracts from their long positions and added 1,453 contracts to their short positions, putting them net long 98,179 contracts, the CFTC said.