June 10, 2008

 

CBOT Soy Outlook on Tuesday: Up 4-8 cents following USDA supply/demand reports

 

 

Soybean futures on the Chicago Board of Trade are seen starting Tuesday's day session higher, supported by tighter balance sheet projections and slow planting progress.

 

CBOT soybean futures are called to start the session 4 to 8 cents higher. The soybean market is poised to open higher on U.S. Department of Agriculture supply and demand and crop progress data, but the market could quickly come under pressure after the open, said Brian Hoops, president Midwest Market Solutions in Yankton, S.D.

 

The tighter USDA supply and demand balance sheet was not a surprise, and with the suspension of the Argentina farmers' strike, nearby contracts should feel some pressure, Hoops added.

 

The USDA estimated U.S. 2007-08 soybean ending stocks at 125 million bushels, down 20 million from the 145 million estimated in May. The USDA raised its export estimate by 20 million bushels accounting for the change.

 

The USDA estimated U.S. 2008-09 soybean ending stocks at 175 million bushels, down from the May estimate of 185 million.

 

Lower 2008-09 beginning stocks reflect a higher export projection for 2007-08, USDA reported. Soybean production and trade are unchanged, but crush is reduced 10 million bushels mainly reflecting reduced prospects for domestic soybean meal use.

 

Other changes include reduced soybean oil used for biodiesel production for both 2007-08 and 2008-09 as high soybean oil prices relative to other fats and oils have reduced the soybean oil share of total biodiesel production more quickly than expected.

 

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

 

The government raised its estimate of 2007-08 world soybean ending stocks to 49.26 million metric tonnes from 49.04 million in May.

 

The USDA said 77% of the U.S. soybean crop was planted, up from 69% last week but below the five-year average of 89%. As with corn, weather has been the primary hurdle to soy planting.

 

"It's very slow going for the soybean crop," said Joel Karlin, sales manager and commodity sales coordinator for Western Milling. "They're still trying to plant, and there are some acres that might not get in the ground."

 

In Illinois, 66% of the soybean crop was planted, up from 57% last week but down from the average of 92%. The USDA said 56% of the U.S. soybean crop has emerged, up from 32% last week but below the average of 74%. The USDA said the good-to-excellent condition rating for the U.S. soybean crop was 57%.

 

The DTN Meteorlogix weather forecast said a new round of severe storms is expected within the next few days for the U.S. Midwest. This likely means more flooding concerns and more concerns about crop condition for both corn and soybeans.

 

A technical analyst said the next upside price objective for July soybeans is to push and close prices above psychological resistance at US$15.00 a bushel. The next downside price objective is pushing and closing prices below solid support at US$13.90.

 

First resistance for July soybeans is seen at Monday's high of US$14.89 1/2 and then at US$15.00. First support is seen at Monday's low of US$14.46 1/2 and then at US$14.15.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday on U.S. weather concerns and high crude oil prices. The benchmark January 2009 soybean contract settled RMB68 higher at RMB4,815 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended 3.6% lower Tuesday after a fall in exports reinforced concerns over sluggish demand in the last two months and end-month inventories bounced back to near-record levels, said market participants. The benchmark August contract on the Bursa Malaysia Derivatives ended MYR130 lower at the intraday low of MYR3,530 a metric tonne.