March 31, 2008

 

CBOT Soy Outlook on Monday: Down 40-60 cents; USDA data seen bearish prices

  

 

Chicago Board of Trade soybean futures are seen starting Monday's day session sharply lower, pressured by larger-than-expected prospective planted acres and March 1 quarterly grain stocks data from U.S. Department of Agriculture.

 

CBOT soybean futures are called to start the session 40 to 60 cents lower.

 

The USDA data is seen feeding into the market's bearish perception, as it didn't provide any bullish influences, analysts said.

 

The USDA estimated U.S. 2008-09 soybean planted acreage at 74.793 million acres, above the average analyst estimate of 71.526 million, as well as above the high end of trade estimates at 74.239 million. U.S. soybean planted acreage was 63.631 million in 2007.

 

2008 soybean acreage is up 18% from last year, but 1% below the record high acreage in 2006, USDA reports. Acreage increases are expected in all states, with the largest increases expected in Iowa and Nebraska, up 1.25 million acres and 1.20 million acres from 2007, respectively, USDA reported.

 

Increases of at least 800,000 acres are also expected in Indiana, Minnesota, and South Dakota, USDA added.

 

"The report at first glance is very bearish for soybeans, but with the market falling sharply in previous sessions, the question is how much of this is already factored into prices," a CBOT floor trader said.

 

"The numbers aren't surprising, as the market has pretty well anticipated this report, if you look at what we've been doing price-wise, building in a pretty hefty reduction in corn acres and a pretty substantial increase in soybean/wheat acres," said Rich Balvanz, analyst with Ag Management Services in Marion, Iowa.

 

"The issue now is, will wet weather increase these soybean acres even more, or has the shift in the corn/bean price ratio the last couple of weeks made any difference? I assume we'll see a little selling early on the soybean side of things, but given where we are on this corn/bean price ratio, I'm not sure how much further out of whack we can push things" he added

 

Soybean stocks as of March 1, 2008, were 1.428 billion bushels, higher than the average estimate of 1.352 billion bushels and above the upper end of trade of a Dow Jones Newswires survey at 1.425 billion. U.S. soybean stocks totaled 1.787 billion on March 1, 2007. Indicated disappearance for the December 2007 - February 2008 quarter totaled 904 million bushels, down 1% from the same period a year earlier.

 

A technical analyst said the next upside price objective for July soybeans is to push prices above solid technical resistance at US$13.39 1/4 a bushel, which would fill on the upside Friday's big downside price gap on the daily bar chart. The next downside price objective is pushing and closing prices below solid support at the March low of US$12.22.

 

First resistance for July soybeans is seen at US$13.00 and then at Friday's high of US$13.07. First support is seen at Friday's low of US$12.74 and then at US$12.50.

 

Index funds lowered their net long CBOT soybean futures and options positions combined, which now totals 175,137 contracts as of March 25, down from 176,541 the prior week, according to Commodity Futures Trading Commission, as reported Friday in its supplemental commitment of traders report. Traditional large speculative traders were net long 76,993 contracts compared with net longs of 79,092 in the previous week. Commercials held net short combined futures and options positions totaling 218,540 contracts, down from the previous week's 224,871 contracts.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Monday, awaiting a planting report to be issued by the U.S. Department of Agriculture. The benchmark January 2009 soybean contract settled RMB93 lower, or down 2.2%, at RMB4,086 a metric tonne.

 

Meanwhile, Chinese importers booked five to seven cargoes of soybeans from the U.S. and Brazil last week, according to data Monday from Shanghai JCI. Most of the soybeans, which are to be delivered in April and May, are from the U.S., said an analyst at the grain consultancy.

 

Crude palm oil futures on Malaysia's derivatives exchange fell 4.36% Monday on long liquidation as traders took cues from weak soybean oil and a hike in outright margins for trading, said trade participants. The benchmark June contract on the Bursa Malaysia Derivatives ended MYR155 lower at MYR3,395 a metric tonne, close to an intraday low of MYR3,390/tonne.