March 30, 2007

 

CBOT Soy Outlook Friday: Seen up 5-10 cents; USDA acres, technical momentum

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session higher, underpinned by supportive U.S. Department of Agriculture acreage data and bullish technical momentum.

 

CBOT soybean futures are called to start the session 5 to 10 cents per bushel higher.

 

The USDA data is seen feeding into the market's already bullish perception, as it did provide any bearish influences, analysts said.

 

USDA forecast Friday U.S. farmers would plant 67.140 million acres with soybeans this year, an 11% decrease from 2006 due mainly to a switch to corn crops. If realized, soybean acreage would be the lowest since 1996, USDA reported. The range of estimates from a Dow Jones Newswires survey pointed to soybeans between 65.927 million and 70.800 million acres.

 

Decreases in acreage are expected across the US corn-belt, with the largest decline seen in Illinois, down 1.40 million from 2006. Soybean acreage in the US Southeast is projected higher, USDA said in the report.

 

Bullish technical momentum will aide the supportive tone, with traders keeping an eye on soyoil and crude oil futures for influence as well, traders add.

 

However, the market has priced in a sizable drop in soybean acres recently, and ideas that soybeans could still pick up a 1 to 2 million acres by the actual June acreage report if weather does not cooperate with corn plantings could limit upside potential, a CBOT floor analyst said.

 

The trade was looking for soybean acres below 69 million and got it, with the stocks figure also within estimates, said Mike Zuzolo, senior analyst with Risk Management Commodities in Lafayette, Ind.

 

The USDA on Friday, also estimated March 1 U.S. soybean stocks at a record 1.784 billion bushels, up 7% from 1.669 billion bushels a year ago. Disappearance during the December to February quarter was estimated at 917 million bushels, up 10% from the same quarter a year earlier, USDA reported.

 

A technical analyst said market bulls have regained solid upside technical momentum this week. The market would regain better technical momentum by producing a close above solid chart resistance at US$7.93 1/2 basis May futures, which would fill a downside price gap on the daily bar chart. The next downside price objective is closing prices below solid support at US$7.60.

 

First resistance for May soybeans is seen at US$7.85 and then at US$7.93 1/2. First support is seen at US$7.75 and then at US$7.70.

 

The DTN Meteorlogix Weather Service forecast said episodes of showers and thunderstorms are on tap for the western Midwest Friday and Saturday. Drier conditions are forecast for Sunday, with temperatures averaging near to below normal northwest, mostly above normal elsewhere in the region. In the eastern Midwest, there is a chance for light showers late Friday through western and southern locations. Showers and thundershowers are forecast for Saturday and Saturday night. Drier conditions return Sunday. Temperatures will average above normal through Sunday, Meteorlogix reports.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled up Friday on Thursday's gains in CBOT soybean futures. The benchmark September 2007 contract rose RMB21 to settle at RMB3,237 metric tonne, after trading between RMB3,217/tonne and RMB3,259/tonne.

 

Meanwhile, cash soybean prices in China's major producing regions were flat in the week to Friday in thin trade, and analysts expect little change in the coming weeks with no effect from price changes in imports.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Friday, with the benchmark contract reaching an eight-year high as the market continued to ride on the strength of other commodities. The benchmark June contract ended up MYR25 at MYR2,070 a metric tonne.