April 9, 2009

 

CBOT Soy Outlook on Thursday: Up 15-20 cents; USDA report, outside market support

 

 

Soybean futures at the Chicago Board of Trade are poised to continue their upward trend to start Thursday's day session, gaining strength from a supportive supply and demand report and higher outside market influences.

 

CBOT soybean futures are called to open 15 cents to 20 cents higher.

 

"The U.S. Department of Agriculture supply and demand report will help support the positive price action seen in soybeans since the release of the March 31 stocks report," said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

U.S. soybean ending stocks were pegged at 165 million bushels, the lowest since the 2003-04 marketing year. The estimate is down 20 million bushels from the USDA's estimate in March, and below the average analyst estimate of 169 million bushels.

 

"Support will be seen from the USDA looking for the export pace to remain strong for soybeans," Roose said. Additionally, "the USDA has not adjusted the residual use figure that was evident in the quarterly stocks report and that could lead to end stocks dropping to 145 million bushels down the road," Roose added. In the supply/demand balance sheet, the government raised its export estimate by 25 million bushels to a record 1.210 billion bushels reflecting strong year- to-date shipments and outstanding sales, and prospects for reduced export competition from South America as the Argentina soybean crop continues to deteriorate.

 

The amount of soybeans the USDA expects to be crushed was lowered by 5 million bushels to 1.635 billion bushels due to persistent weakness in domestic soybean meal demand.

 

The USDA left its estimate of 2008-09 production for Brazil unchanged at 57 million metric tonnes and lowered Argentina's production 4 million tonnes to 39 million. Projected soybean world ending stocks for the 2008-09 crop year were estimated at 45.84 million tonnes, down from the 49.95 million forecast in March.

 

Higher crude oil futures, stock index futures and weakness in the U.S. dollar are expected to lend support to the market as well. Technical momentum is another positive feature, but traders will keep an eye on signs for buying exhaustion, as participants look to even positions ahead of an extended holiday weekend.

 

CBOT markets will be closed Friday in observance of the Good Friday holiday.

 

A technical analyst said prices are in a five-week-old uptrend on the daily bar chart. The next upside price objective for soybean bulls is to push and close prices above solid technical resistance at the January high of US$10.69 a bushel. The next downside price objective is pushing and closing prices below solid technical support at US$9.40 a bushel.

 

The USDA reported total weekly soybean export sales were a net 621,700 metric tonnes for the week ended April 2. Sales for 2008-09 were a net 431,500 metric tonnes. Analysts had forecast sales between 450,000 and 900,000 metric tonnes.

 

Soymeal sales were a net 110,300 tonnes. Trade estimates ranged from 75,000 to 175,000 tonnes. Soyoil commitments were 6,900 metric tonnes. Analysts had forecast sales between 10,000 and 20,000 tonnes.

 

In overseas markets, soybean futures rose slightly on the Dalian Commodity Exchange Thursday on a stream of positive news about steadying demand and expectations of tighter supply. Crude palm oil futures on Malaysia's derivatives exchange reached fresh six-month highs on concerns that palm oil stocks may fall toward 1.2 million tonnes during the first half of 2009, said trade participants.