April 10, 2006

 

CBOT Soy Outlook on Monday: Seen up on USDA data; outside markets

 

 

Chicago Board of Trade soybean futures are seen starting Monday's open auction session firmer following revised U.S. and world supply and demand projections from the U.S. Department of Agriculture.

 

Analysts expect soybeans to open 2 to 4 cents per bushel higher.

 

The lack of any changes to the U.S. carryout is supportive to the market, as the trade had been anticipating ending stocks to rise with exports trimmed, analysts said.

 

A 1.2% decline in world ending stocks and a 1.5 million bushel reduction in Brazil's production forecasts were mildly supportive, but the trade was anticipating a downward revision in Brazil's output, traders added.

 

Meanwhile, strength in outside inflationary markets, with metals and crude oil futures up in early Monday action is expected to lend support to the market's upside potential. Traders said with all of the bearish fundamental news in the soybean market being factored into prices, downside momentum may be limited, with futures overdue for additional consolidation.

 

In its key monthly crop report, the USDA on Monday left its forecast for 2005-06 U.S. soybean ending stocks unchanged at a record 565 million bushels with minor adjustments to seed and residual figures the only revisions in the U.S. balance sheet. The USDA lowered its forecast for U.S. soybean residual to 67 million bushels, down from its March forecast of 71 million. U.S. soybeans used for seed were increased 3 million bushels to 94 million bushels.

 

The USDA also trimmed its forecast for 2005-06 global soybean ending stocks to 53.75 million metric tonnes after trimming its forecast for Brazilian soybean production to 57 million metric tonnes from its March prediction of 58.5 million tonnes. The USDA said Brazilian production was down 1.5 million tonnes based in part on lower-than-expected yields reported by the Brazilian government.

 

U.S. soymeal prospective exports were raised 150,000 short tonnes reflecting strong year-to-date shipments. Domestic soymeal use was reduced on the slower-than-expected pace of domestic disappearance and strong competition from other protein sources including corn-byproducts.

 

Market technicians said it will take a close above chart resistance at $5.90 to provide some fresh upside technical momentum. First resistance for July soybeans is seen at $5.74--Friday's high--and then at $5.78. First support is seen at $5.70 1/4--last week's low--and then at $5.65--the November 2005 low.

 

The Commodity Futures Trading Commission said Friday in its commitments of traders report that large speculative traders held net short futures and options positions totaling 51,850 lots in soybeans as April 4, up from 33,743 lots last week. In soyoil, large speculative traders held net longs of 9,201 lots compared to 14,311 last week, and a net short position of 20,416 lots in soymeal compared to 10,113 a week ago.

 

On tap for Monday, the U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 10:00 a.m. CDT (1500 GMT).

 

U.S. Midwest cash soybean basis bids are mixed Monday, cash dealers said. Spot cash soybean bids were down 1 cent in St Louis, Mo., up 3 cents in Central, Ill, and up 6 cents in Cedar Rapids, Iowa, according to cash sources Monday.

 

DTN Meteorlogix Weather Service forecast said thunderstorms during the weekend in Brazil may mean harvest delays early this week, especially in parts of northern Parana and Mato Grosso. In Argentina, heavy thunderstorms through parts of Cordoba and Sante Fe during the weekend, means possible harvest delays early this week, Meteorlogix adds.

 

Rotterdam soybeans were lower and soymeal prices were mostly lower, and European vegoils were flat to higher.

 

In overseas markets, soybean futures on China's Dalian Commodity Exchange settled lower Monday in thin trade, as local investors kept to the sidelines before the USDA's report Monday, analysts said. The benchmark September 2006 soybean contract settled RMB25 lower at RMB2,587 a metric tonne, after trading between RMB2,577/tonne and RMB2,597/tonne.