April 10, 2007

 

CBOT Soy Outlook on Tuesday: Down 2-4 cents; USDA data, technicals, acres talk

 

 

Soybean futures on the Chicago Board of Trade are seen starting Tuesday's day session lower, pressured by U.S. Department of Agriculture's report, bearish technical signals and acreage discussions.

 

In e-CBOT trade, May was 2 1/2 cents higher at US$7.51 1/2, July was 1 3/4-cent higher at US$7.68 1/4, and November soybeans were 3 cents higher at US$7.96 1/2.

 

CBOT soybean futures are called to start the session 2 to 4 cents per bushel lower.

 

The larger than expected U.S. and world ending stocks will be a bearish influence on prices, with the recent negative technical picture, and concerns Midwest weather conditions could lead to further U.S. soy acres putting a defensive spin on prices analysts said.

 

However, after recent setbacks, some traders see the market as overdue for a bounce, particularly with prices trading near the bottom of a one-month trading range. Nevertheless, the USDA's report will provide a bearish influence that may attract speculative sellers, a trader added.

 

"We just about have to attribute the increase in the bean carryover estimate to the size of the South American crop, more than anything. On the export side of things, you have to feel that their record-large crop is going to make them more competitive for awhile," Rich Balvanz of Ag Management Services told Dow Jones Newswires.

 

The USDA estimated U.S. soybean ending stocks at a record 615 million bushels, up 20 million from the March estimate of 595 million and above the average analyst estimate of 586 million bushels.

 

Soybean exports are reduced 20 million bushels reflecting slower than expected shipments to date reported by the U.S. Census Bureau, USDA reported. Soybean crush is forecast at 1,765 million bushels, down 15 million bushels from last month. The reduction is due to lower projected domestic soybean meal use and reduced prospects for soybean meal exports. Although soybean meal exports have been strong through the first half of the marketing year, sharply higher South American supplies are expected to reduce the competitiveness of U.S. soybean meal in the second half of the year.

 

Residual use is increased 20 million bushels this month as indicated by the March 30 Grain Stocks report.

 

On the world scene global soybean stocks were raised 3.52 million metric tonnes to 61.02 million, up from 57.5 million tonnes in March. Brazil soybean production was raised 1.8 million tonnes to a record 58.8 million tonnes based on higher yields, especially in southern states. Soybean production is raised by a combined 2.3 million tonnes for Argentina and Paraguay. The Argentina crop is projected at a record 45.5 million tonnes, up 1.5 million tonnes from last month. Despite heavy rain that fell during the last week in March over much of the growing area, yields are projected record high at 2.88 tonnes per hectare.

 

A technical analyst said July soybean prices are presently in a wide trading range bound by the March low of US$7.54 and the April high of US$8.01. The market would regain upside technical momentum by producing a close above solid chart resistance at Monday's high of US$7.86 basis July futures. The next downside price objective is closing prices below solid support at US$7.63.

 

First resistance for July soybeans is seen at US$7.70 and then at US$7.75. First support is seen at US$7.63 and then at US$7.60.

 

The DTN Meteorlogix Weather Service forecast said light to moderate rain and some snow is seen for the western Midwest Tuesday. A little light snow or rain may linger early Wednesday, before conditions turn drier. Thursday's forecast is cloudy with a little light precipitation possible. Temperatures will average below or well below normal during this time period.

 

In the eastern Midwest, light rain or drizzle may develop in the western parts of the region late Tuesday. Light to moderate rain, with heavier amounts locally are expected Tuesday night and Wednesday, with variable clouds and a little light precipitation Thursday. Temperatures will average below normal, Meteorlogix forecasts.

 

The Meteorlogix 6-10 day outlook for the U.S. Midwest calls for temperatures near to above normal northwest, and near to below normal elsewhere in the region. Precipitation is seen averaging near to above normal south and east, and near to below normal northwest.