January 12, 2009

 

CBOT Soy Outlook on Monday: Down, USDA data weighs; Argentine weather eyed

 

 

Soybean futures on the Chicago Board of Trade are expected to start Monday's day session on the defensive, influenced by larger than expected U.S. Department of Agriculture soybean stock and production estimates.

 

CBOT soybean futures are called 10 cents to 20 cents lower.

 

The USDA data was bearish for the market, but not extremely, said Bill Nelson, analyst with Doane Advisory Services in St. Louis, MO.

 

The report provided confirmation of a slow domestic crush, but the data could be counteracted by Argentina weather conditions that are forecast to remain dry for the next week to 10-days, Nelson said.

 

USDA estimated 2008-09 U.S. soybean ending stocks at 225 million bushels, up from its previous forecast of 205 million, and well above the average of a Dow Jones Newswires survey of 186 million bushels.

 

U.S. soybean exports are raised 50 million bushels to 1.1 billion due to strong sales and shipments to China. Projected soybean crush is reduced 30 million bushels to 1.685 billion bushels, reflecting sharply reduced domestic soybean meal consumption.

 

"We're still showing good demand on soybeans, but with no tightness in world supplies we've got a different market here than a year ago," said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

USDA estimated 2008 soybean production 2.959 billion bushels in its annual production report, up from 2.921 billion estimated in November and above the average of survey estimates at 2.910 billion. U.S. soybean stocks as of Dec 1. were reported at 2.276 billion bushels, above the average of survey estimates at 2.181 billion.

 

World ending stocks were lowered to 53.94 million metric tonnes, down from 54.19 million in December. Brazilian soybean production was left unchanged at 59 million metric tonnes, with Argentina output trimmed 1 million tonnes to 49.5 million tonnes.

 

A market technician said the next upside price objective for March soybeans is to push and close prices above major psychological resistance at US$11.00 a bushel. The next downside price objective is pushing and closing prices below solid technical support at last week's low of US$9.65 1/4 a bushel.

 

First resistance for March soybeans is seen at Friday's high of US$10.40 and then at US$10.50. First support is seen at US$10.25 and then at US$10.00.

 

The DTN Meteorlogix weather outlook said a pattern of little or no significant rainfall and episodes of hot weather in Argentina will increase stress on developing corn, soybeans and sunflowers this week.

 

In Brazil, there's an improving rainfall pattern for developing soybeans in Rio Grande do Sul and Parana at this time. Rain returning to the Mato Grosso and Goias later this week will maintain favorable crop conditions, Meteorlogix said.

 

The Chinese government's plan to purchase more local grains for its reserves will likely help in supporting prices, and won't result in a rebound as markets will still be saddled with ample stocks, analysts said Monday. China will buy another 3 million metric tonnes of soybeans to stabilize local prices and protect farmers' interests, the State Administration of Grain said Monday.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled sharply higher Monday, boosted by gains on CBOT overnight and the government's expanded purchase plans. The benchmark September 2009 soybean contract settled RMB115, or 3.4%, higher at RMB3,499 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange rose as much as 4.1% Monday on fresh buying emanating from a fall in both output and inventories, said trade participants. The benchmark March contract on Bursa Malaysia Derivatives ended MYR68 higher at MYR1,988 a metric tonne.