March 31, 2010

 

CBOT Soy Outlook on Wednesday: Seen lower after USDA stocks, acres report

 

 

Soybean futures at the Chicago Board of Trade are likely to start Wednesday's day session on the defensive, pressured by larger-than-expected quarterly grain stocks.

 

CBOT soybeans are seen opening 10 cents to 15 cents lower.

 

The U.S. Department of Agriculture data is expected to generate a bearish market perception, while outside markets provide some supportive influences, analysts said.

 

The higher stocks figure alleviates some market concerns about tightening old crop inventories, particularly in the face of a record South American harvest. The market is seen correcting from recent gains that lifted prices near the upper end of a recent trading range. Futures had climbed on anticipation of a bullish stocks figure.

 

The USDA data will take center stage in early action, but outside factors will remain a focal point, with early price strength in crude oil and a lower U.S. dollar index seen adding support, a CBOT floor analyst added.

 

Soybean stocks as of March 1 were 1.270 billion bushels, higher than the average estimate of 1.207 billion bushels and at the high end of trade estimates from a Dow Jones Newswires survey. U.S. soybean stocks totaled 1.302 billion on March 1, 2009. Indicated disappearance for the December 2009-February 2010 quarter totaled 1.067 billion bushels.

 

The USDA estimated U.S. 2010-11 soybean planted acreage at 78.098 million acres, below-the-average analyst estimate of 78.550 million. U.S. soybean planted acreage was 77.5 million in 2009. Despite acres falling below expectations, the 78.098 million acres of soybeans farmers say they intend to sow in 2010 would be a record for planted area, the USDA said in Wednesday's prospective plantings report.

 

However, Global Commodity Analytics president Mike Zuzolo sees the stocks figure as neutral, as it confirms a little over 7% less soybean stocks than a year ago. "The acres projection is manageable and that should overshadow the stocks data if the outside markets continue to support prices," Zuzolo added.

 

A lower U.S. dollar and a port strike that limits Argentina's ability to load out supplies for export are likely to support the market as well. The inability of Argentina to move supplies could encourage China to shift buying interest to U.S. origins if the strike lingers on.

 

End of the month and quarter positioning is seen affecting prices too, a CBOT floor broker said.

 

A technical analyst said first resistance for May soybeans is seen at this week's high of US$9.77 1/2 and then at US$9.85. First support is seen at US$9.60 and then at US$9.50.