January 11, 2008

 

CBOT Soy Outlook on Friday: Up 7-10 cents; corn influence overshadows USDA

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session on firm footing, feeding off spillover support from corn and wheat with the influence of speculative money flows entering the market underpinning prices, analysts said.

 

CBOT soybean futures are called to start the session 7 to 10 cents higher.

 

The U.S. Department of Agriculture's crop report was seen as neutral to slightly bearish, but with a strong demand base and the market in a battle for acres with corn heading toward the spring, soybeans will be carried higher with corn and wheat, CBOT traders said.

 

The market will continue to focus on longer term bullish outlooks, with concerns over South American weather featured as ending stocks continue to tighten despite coming in above trade expectations, analysts said.

 

Final 2007 U.S. soybean production was estimated at 2.585 billion bushels, 9 million bushels less than the 2.594 billion estimated in November, but inline with the average trade estimate of 2.584 billion.

 

The USDA cut 2007-08 ending stocks by 10 million bushels to 175 million from the 185 million bushels forecast in December but above the average analyst guess of 170 million bushels.

 

"The report is relatively a little bit bearish for old-crop soybeans with the quarterly stocks being a little bit heavier than the trade estimates. We would have hoped we would have more first quarter usage of these soybeans," said Joe Victor analyst with Allendale Inc in McHenry Ill.

 

Soybean quarterly stocks as of Dec. 1, 2007, were forecast at 2.329 billion bushels, compared to the 2.701 billion as of Dec. 1, 2006, and above the average analyst estimate of 2.268 billion.

 

The USDA trimmed Brazil's 2007-07 production estimate 1.5 million tonnes to 60.5 million tonnes, but left Argentina's unchanged at 47 million.

 

A technical analyst said the next upside price objective for March soybeans is to push and close prices above the contract high of US$12.79 1/2. The next downside price objective is pushing prices below solid technical support at US$12.36.

 

First resistance for March soybeans is seen at Thursday's high of US$12.70 1/2 and then at US$12.79 1/2. First support is seen at Thursday's low of US$12.52 and then at this week's low of US$12.47.

 

The DTN Meteorlogix Weather Service said another ridge of high pressure is expected to build westward out of the Atlantic into central Argentina by early next week promoting another round of hot, dry weather in the central grain belt of Argentina stressing crops. This ridge is expected to dominate central Argentina through at least the middle of next week before moving out into the pacific allowing for the chance of some scattered showers and cooler temperatures later next week.

 

In overseas markets, Soybean futures traded on the Dalian Commodity Exchange settled higher Friday on bullish expectations for a USDA crop report. The benchmark September 2008 soybean contract settled RMB63 higher at 4,753 a metric tonne.

 

Cash soybean prices in China's major producing regions were higher in the week ended Friday, as farmers have limited stocks while futures prices stayed at near-record levels.

 

Crude palm oil futures on Malaysia's derivatives exchange ended at yet another record high Friday, rising above MYR3,250 a metric tonne for the first time, on fears of a further drawdown in Malaysian inventories, lower output and firm soyoil prices, trade participants said. The benchmark March contract on Bursa Malaysia Derivatives ended MYR79 higher at an all time high of MYR3,280/tonne.