December 29, 2008

 

CBOT Soy Outlook on Monday: Up, technical, fundamentals, outside markets buoy

 

 

Soybean futures on the Chicago Board of Trade are poised to extend its current uptrend, continuing the overnight theme amid a combination of technical, fundamental and outside market support.

 

CBOT soybean futures are called 20 cents to 25 cents higher.

 

In overnight electronic trading, March soybeans finished 23 3/4 cents higher at US$9.80 1/4. March soymeal was US$5.00 higher at US$302.00 per short tonne, while March soyoil ended 75 points higher at 33.87 cents per pound.

 

The market looks strong on technical charts, rallying nearly US$2.00 a bushel after setting contract lows December 5, analysts said.

 

Dryness issues in Argentina and in southern Brazil coupled with supportive underlying export demand are fundamentally bullish factors keeping sellers on the run, analysts added.

 

Meanwhile, outside markets are lending support to prices as well, with higher crude oil prices due to tensions in the Middle East and weakness in the U.S. dollar aiding the bullish cause, said Vic Lespinasse, analyst with Grainanalyst.com.

 

However, traders remained concerned that the market could be close to setting a near term top. Overbought conditions and end-of-the-year position squaring may uncover selling pressure on signs of upside exhaustion, analysts added.

 

A technical analyst said if the March soybean contract extends this month's rally, November's high crossing at 9.93 1/2, then the 25% retracement level of the July-December decline crossing at 9.97 3/4, are the next upside targets. Closes below the 20-day moving average crossing at 8.60 3/4 would temper the near-term friendly outlook.

 

The DTN Meteorlogix weather forecast said Argentina soybeans will come under some stress due to less than ideal rainfall and higher than normal temperatures during the next 5-7 days. It still appears likely that hot weather will return by the end of this week and this hot weather may continue into early next week.

 

In Brazil, it appears likely that key growing areas from Parana northward will pick up more rain this week, maintaining favorable growing conditions. It is somewhat uncertain how much, if any, significant rain will occur in Rio Grande do Sul, Meteorlogix said.

 

On tap for Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11:00 a.m., EST. Commodity Futures Trading Commission is scheduled to issue its weekly commitment of traders report at 3:30 p.m., EST.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled sharply higher Monday, in line with Friday's big rise on CBOT. The benchmark May 2009 soybean contract settled RMB117 higher at RMB3,403/tonne, or up 3.6%.