April 9, 2008

 

CBOT Soy Outlook on Wednesday: Up, overnight gains, but USDA data offsets

 

 

Chicago Board of Trade soybean futures are expected to start Wednesday's day session firmer, taking its cue from overnight trade, with negativity from U.S. Department of Agriculture's supply and demand report offsetting some of the overnight strength.

 

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

 

There are two schools of thought among traders following the supply and demand report, with higher U.S. and world carryout numbers seen negative, while others discount the bearishness of the report, as the revisions were expected after last week's stocks report, a CBOT floor analyst said.

 

The USDA raised 2007-08 U.S. soybean ending stocks by 20 million bushels to 160 million from the 140 million bushels forecast in March, and slightly above the average analyst guess of 157 million bushels.

 

The U.S. and world carryover data were a little negative for soybeans, but U.S. weather, an Argentina strike as well as a 50 million bushel increase in U.S. exports and a 5 million increase in the crush should provide support, said Mike Zuzolo, analyst with Risk Management Commodities in Lafayette, IN.

 

The USDA raised U.S. exports by 50 million bushels to 1.075 billion bushels. USDA said the higher exports reflect strong year-to-date shipments. Despite record high soybean prices, exports have remained strong, especially to China, where imports from the U.S. are likely to exceed the 2004/05 record, USDA said in the report.

 

USDA raised its U.S. soybean crush estimate by 5 million bushels to 1.840 billion bushels, mainly on stronger-than-expected soybean meal and oil exports.

 

USDA trimmed its residual use estimate to 2 million bushels, down from 79 million in March. The residual estimate was reduced based on indications from the March 31 grain stocks report.

 

Spillover support from higher opening calls for corn futures as well as firmer outside markets is seen lending strength to prices as well, traders add.

 

A technical analyst said prices are still in a five-week-old downtrend on the daily bar chart. The next upside price objective for July soybeans is to push and close prices above solid technical resistance at this week's high of US$13.11 a bushel. The next downside price objective is pushing and closing prices below solid technical support at US$12.50.

 

First resistance for July soybeans is seen at Tuesday's high of US$12.86 and then at US$13.00. First support is seen at this week's low of US$12.64 and then at US$12.50.

 

Meanwhile, U.S. soyoil ending stocks were estimated at 2.792 billion pounds, down from 2.837 billion. The USDA left Brazil's 2007-08 soybean production and Argentina's production unchanged from the March estimate at 61 million tonnes and 47 million respectively. World ending stocks were raised to 49.31 million tonnes, up from 47.44 million in March.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday, but the market was cautious ahead of the U.S. Department of Agriculture's report. The benchmark January 2009 soybean contract settled RMB35 higher at RMB3,973 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Wednesday on speculation Apr. 1-10 exports are likely to be sharply lower on month around 311,000 metric tonnes, said trade participants. The benchmark June contract on Bursa Malaysia Derivatives ended MYR50 lower at MYR3,325/tonne after reaching an intraday low of MYR3,290/tonne.

 

In other news, USDA's attache is raising its Argentine soybean production forecast to 47.5 million metric tonnes on planted area totaling 17 million hectares, according to a report posted Tuesday on the Foreign Agricultural Services Web site.