May 9, 2008

 

CBOT Soy Outlook on Friday: Up 20-30 cents, bullish USDA data, outside markets

 

 

Soybean futures on the Chicago Board of Trade are expected to start Friday's day session sharply higher, bolstered by bullish ending stock projections and outside influences.

 

CBOT soybean futures are called to start the session 20 to 30 cents higher.

 

The U.S. Department of Agriculture's supply and demand report provided market bulls with a shot in the arm, with tighter ending supply forecasts serving as the catalyst, analysts said.

 

The USDA estimated U.S. 2007-08 soybean ending stocks at 145 million bushels, down 15 million from the 160 million estimated in April. The USDA raised its export estimate by 15 million bushels accounting for the change.

 

The USDA estimated U.S. 2008-09 soybean ending stocks at 185 million bushels, below the average analyst estimate of 273 million.

 

The USDA has projected a tighter supply situation in the old crop, but what stands out is, even with a large increase in projected production in 2008, demand will keep supplies tight in the 2008-09 marketing year, a CBOT floor broker said.

 

"The data is very bullish for beans, and it emphasizes that 2008 production has no room for error, and the market will have to ration demand," he added.

 

Meanwhile, sharply higher crude oil and a weaker U.S. dollar are seen aiding the higher tone, traders said. Lingering concerns for the drawn out farmer's strike in Argentina could potentially shift some demand to U.S. shores, as well as the unwinding of corn/soybean spreads are seen adding fuel to the bullish tone, traders added.

 

A technical analyst said market bulls and bears are back on a level near-term technical playing field. The next downside price objective for July soybeans is pushing and closing prices below solid technical support at this week's low of US$12.75. The next upside price objective is to push and close prices above solid technical resistance at US$13.50 a bushel.

 

First support for July soybeans is seen at Thursday's low of US$13.01 and then at US$12.90. First resistance is seen at Thursday's high of US$13.20 and then at this week's high of US$13.33.

 

The USDA left its production estimates for Argentina, Brazil and China unchanged from April at 47 million metric tonnes, 61 million tonnes and 14.3 million tonnes, respectively.

 

The government lowered its estimate of 2007-08 world soybean ending stocks to 49.04 million metric tonnes from 49.31 million in April.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled moderately higher Friday, supported by stable cash prices. The benchmark January 2009 soybean contracts settled RMB20 higher at RMB4,222 a metric tonne, or up 0.48%, after trading between RMB4,193 and RMB4,250/tonne.

 

China's cash soybean prices in the major producing regions were stable in the week ended Friday, as processing plants were not buying actively due to sluggish soybean oil demand.

 

China booked three to five cargoes of soybeans from overseas this week, according to data from grain consultancy firm Shanghai JCI Friday. These cargoes, which were mostly from Argentina, are to be delivered in June, Shanghai JCI said.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher Friday on a strong export outlook and expectations that end-April inventories may not have increased despite shipments coming in from Indonesia, said trade participants. The benchmark July contract on Bursa Malaysia Derivatives ended MYR38 higher at MYR3,495/tonne after reaching an 11-day high of MYR3,497/tonne.