January 12, 2007

 

CBOT Soy Outlook on Friday: Up 7-15 c on supportive USDA crop reports

 

 

Soybean futures on the Chicago Board of Trade are seen starting Friday's day session sharply higher, buoyed by surprising crop data from the U.S. Department of Agriculture and expected price strength in neighboring corn futures.

Soybean futures are called to open 7 to 15 cents higher.

 

The USDA's report was a surprise, with the USDA breaking away from historical trends of big crops getting bigger, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

However, the yield reductions at the end of the fall harvest provided some indications of a possible drop in the production forecast, he added.

 

USDA reported U.S. soybean production for the 2006-07 marketing year at a record 3.188 billion bushels. The figure is down from the 3.204 billion forecasted in the USDA's November report. The survey of estimates ranged between 3.166 billion bushels to 3.310 billion, with the average of the estimates at 3.235 billion.

 

Spillover strength from corn futures will aide the supportive tone, as corn and soybeans are expected to wage a battle for acres heading into the spring, a CBOT floor analyst said.

 

Technically motivated buying is expected to add price strength, with the crop reports and corn strength seen lifting prices above meaningful resistance at major moving averages.

 

A market technician said the next upside price objective for March soybeans is to close prices above solid resistance at US$6.80 a bushel. The next downside price objective is closing prices below solid support at this week's low of US$6.57.

 

First resistance for January soybeans is seen at Thursday's high of US$6.78 and then at US$6.82. First support is seen at Thursday's low of US$6.68 and then at US$6.65.

 

The USDA projected 2005-06 U.S. soybean ending stocks at 575 million bushels, below the average trade estimate of 586 million. Analyst estimates spanned from 515 million to 632 million. Soybean exports were reduced 25 million bushels to 1.120 billion bushels reflecting weaker-than-expected shipments in November and December, USDA said.

 

Based on higher production forecasts, and reported usage from the domestic and export sectors, USDA reported soybean stocks as of Dec. 1 at 2.697 billion bushels, well below the average trade estimate of 2.736 billion and below most trade guesses that ranged from 2.529 million to 2.798 billion. Disappearance during the September-November period was reported at 940 million bushels, a 15% increase from the same period last year, USDA said.

 

Global soybean production was raised 0.1 million tonnes to 226.9 million. Argentina's soybean crop was increased 0.5 million tonnes to a record 42.5 million. Good weather during the early part of the growing season improved Argentina's yield prospects, USDA said.

 

In deliveries, a total of 426 delivery notices were posted against January soybeans. The last trade date assigned was Jan. 11. One hundred twenty nine delivery notices were posted against the January soyoil futures. The last trade date assigned was Jan. 10. The house account at Term Commodities issued 92 lots. Soymeal delivery notices totaled 120 lots, with the house account at ADM Investor Services and Bunge Chicago stopping 19 and 38 lots respectively. The last trade date assigned was Jan. 9.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower on pre-weekend long liquidation Friday, amid weak sentiment for domestic cash prices, analysts said. The May 2007 contract settled RMB10 lower at RMB2,828 a metric tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly lower Friday, with floods in a major palm oil region and higher CBOT soyoil futures failing to lift the market out of its bearish state, analysts said. The March CPO contract ended down MYR11 at MYR1,889 a metric tonne.