June 10, 2009

 

CBOT Soy Outlook on Wednesday: Up 5-10 cents; lacks bearish news

 

 

Soybean futures on the Chicago Board of Trade is seen starting Wednesday's day session higher, continuing their recent trend amid the absence of any bearish news from U.S. Department of Agriculture reports.

 

CBOT soybean futures are seen opening 5 cents to 10 cents higher.

 

"The report met trade expectations about as close as any report I can remember, but I think it still has somewhat of a friendly tone to it," said Arlan Suderman, an analyst at Farm Futures.

 

The USDA estimated U.S. 2008-09 soybean ending stocks at 110 million bushels, down 20 million from the 130 million estimated in May. The USDA raised its export estimate by 10 million bushels and the crush by 10 million to account for the change.

 

Soybean exports for 2008/09 are raised to a record 1.25 billion bushels reflecting record sales and increased projected imports for China and reduced soybean exports from Argentina, USDA said in the report. Projected soybean exports for Argentina for 2008/09 are reduced 2 million tonnes to 5.4 million, the lowest in nine years. U.S. soybean crush was raised mainly due to higher projected soybean meal exports, USDA reported.

 

The USDA revised its production estimate for Argentina, trimming its estimate by 2 million tonnes to 32 million. Brazil and China's output was left unchanged at 57 and 16 million tonnes respectively.

 

The tighter old crop stocks will keep traders focused on the need to ration demand, with ending supplies estimated at just below 30 days of usage. With late plantings in the southern Midwest and Delta, it raises concerns about the availability of new supplies as stocks are drained to the bottom of the barrel, a CBOT floor analyst said.

 

Meanwhile, outside markets with a slightly lower U.S. dollar, higher crude oil and equities will have their place in supporting prices as well, analysts said.

 

A technical analyst said the next upside price objective for July soybeans is to push and close prices above major psychological resistance at US$13.00 a bushel. The next downside price objective is pushing and closing prices below solid support at last week's low of US$11.77 a bushel.

 

DTN Meteorlogix said the weather pattern will continue to feature significant thunderstorm events for the western and northern Midwest regions at the end of a 10-day run. It may be somewhat drier and hotter for the southern Midwest.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday, with the market expecting a favorable USDA report. The benchmark January 2010 soybean contract settled RMB12 higher at RMB3,710 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher Wednesday, tracking stronger soyoil and crude oil futures in after-hours trade and largely ignoring news indicating weakening local fundamentals, said trade participants. The benchmark August CPO contract on the Bursa Malaysia Derivatives ended MYR36 up at MYR2,501 a metric tonne.