February 9, 2010

 

CBOT Soy Outlook on Tuesday: Seen up on USDA data, other market support

 

 

Soybean futures on the Chicago Board of Trade are expected to start Tuesday's day session on firm footing, buoyed by supportive supply and demand data and friendly influences from other markets.

 

CBOT soybeans are forecast to open Tuesday's day session 7 cents to 10 cents higher.

 

The market is poised to continue its consolidative bounce, with aid coming from the continued projections from U.S. Department of Agriculture of strong usage and from other markets friendly to commodities, said Don Roose, president of U.S. Commodities.

 

In early trade, crude oil and metal futures are higher and the U.S. dollar index in hovering near unchanged.

 

Technical buying is considered to be underpinning prices, as futures have seemingly found a near-term bottom after bouncing off psychological support at the US$9.00 per bushel level last week.

 

"There has been enough damage to the downside for the time being, opening the door for near-term gains in the absence of fresh bearish news," said Victor Lespinasse, analyst with Grainanalyst.com.

 

The USDA report is a supportive feature to help stem the tide of the market's five-week downtrend.

 

"Now it will be the willingness of end users to get covered, as U.S. supplies shrink and world supplies grow," Roose said. However, record South American production and the competition it will bring to world markets may mitigate rallies in the long term, he added.

 

A technical analyst said first resistance for March soybeans is seen at Monday's high of US$9.39 3/4 and then at US$9.50. First support is seen at US$9.25 and then at Monday's low of US$9.18 3/4.

 

The USDA projected 2009-10 soybean ending stocks of 210 million bushels, down 35 million from the January estimate of 245 million. Analysts on average estimated ending stocks of 219 million bushels.

 

Soybean exports were raised 25 million bushels to 1.400 billion as export shipments continue to exceed earlier projections. Although a record South American harvest is expected to reach the market in coming weeks, tight old-crop South American supplies resulting from last year's historic drought in Argentina continue to support U.S. exports, USDA said in the report.

 

The projected soybean crush was raised 10 million bushels to 1.720 billion reflecting strong soybean meal exports and a lower soybean meal extraction rate.

 

Meanwhile, soybean oil stocks are projected higher this month as the increased crush more than offsets a small reduction in the soybean oil extraction rate, the USDA said.

 

Improved South American production prospects account for higher world output forecasts. Soybean production for Brazil is projected at 66 million tonnes, up 1 million tonnes from last month due to higher yields, the USDA said.

 

The agricultural survey group of Brazil's Census Bureau, the IBGE, on Tuesday put the new 2009-10 soy crop at 66.1 million metric tonnes. The new estimate compares with IBGE's estimate on Jan. 7 of 65.2 million metric tonnes for 2009-10.