March 10, 2010

 

CBOT Soy Outlook on Wednesday: Seen mixed, USDA data fails to provide direction

 

 

Chicago Board of Trade soybean futures are seen starting Wednesday's day session mixed, looking for direction in the absence of any surprises in U.S. Department of Agriculture supply and demand report.

 

CBOT soybeans are called to open 1 cent higher to 3 cents lower.

 

The market may attempt to open in line with higher overnight price action, but with spillover pressure from corn and wheat and a lack of support from outside markets, the market may have trouble sustaining price strength, analysts said.

 

Rising South American production estimates remain a bearish feature for the market, but strong demand provides underpinning support to limit downside pressure.

 

"I think that the report today is beneficial from a standpoint of keeping the nearby premium intact as long as the South Americans fight harvest delays," said Mike Zuzolo, president Global Commodity Analytics.

 

However, "a big jump in soyoil ending stocks reported by USDA may lend pressure to soybeans, as that's been one of the supportive features for beans recently," a CBOT floor trader said.

 

A market technician said the next downside price objective for May soybeans is pushing and closing prices below solid technical support at the February low of US$9.11. The next upside technical objective is pushing and closing May prices above solid technical resistance at last week's high of US$9.71 1/2.

 

U.S. soybean ending stocks were pegged at 190 million bushels, down 20 million bushels from the USDA's estimate in February, and below the average analyst estimate of 195 million bushels.

 

In the supply/demand balance sheet, the government raised its export estimate by 20 million bushels to 1.420 billion bushels while raising the amount of soybeans it expects to be crushed by 10 million bushels to 1.730 billion bushels.

 

"Soybean exports are raised 20 million bushels to a record 1.42 billion reflecting the strong export pace to date," the USDA said in its monthly World Agricultural Supply and Demand Estimates report.

 

The USDA on Wednesday also lowered its production estimate for last year's soybean crop, but only by 2 million bushels. U.S. farmers are now expected to have harvested 3.359 billion bushels of soybeans, down from the February estimate of 3.361 billion bushels.

 

Soybean oil stocks are projected higher due to increased production and lower domestic food use. Soybean oil used for biodiesel is unchanged at 2.2 billion pounds despite a drop in production in January resulting from the loss of the US$1.00 per gallon blending tax credit at the end of 2009. Offsetting production gains are expected later in the year as diesel suppliers increase blending to meet biodiesel mandates, USDA said in the report.

 

The USDA raised its estimate of 2009-10 soybean production for Brazil 1 million tonnes to 67 million tonnes and left Argentina's production unchanged at 53 million.