July 10, 2009

 

CBOT Soy Outlook on Friday: Lower, as outside markets lend pressure

 

 

Soybean futures at the Chicago Board of Trade are expected to start Friday's day session on the defensive, pressured by outside market influences and a slightly bearish supply and demand report.

 

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

 

The higher supply forecast from U.S. Department of Agriculture was seen as slightly negative for prices, traders said. Also, the bearish influence of a higher U.S. dollar, lower crude oil futures and equities are expected to send some bearish sell signals to traders, analysts said.

 

U.S. Department of Agriculture projected 2008-09 U.S. soybean ending stocks of 110 million bushels, unchanged from its June estimate and slightly higher than the average analyst estimate of 107 million bushels.

 

U.S. soybean exports for 2008/09 are projected at 1.26 billion bushels, up 10 million from last month reflecting continued strong shipments and sales. In addition, higher projections for soybean meal exports and domestic soybean meal use result in a 5-million bushel increase in soybean crush to 1.655 billion bushels. Increased soybean exports and crush are offset mainly by reduced residual use.

 

The USDA projected 2009-10 soybean ending stocks of 250 million bushels, up from the June estimate of 210 million. Analysts on average estimated ending stocks of 229 million bushels.

 

"The 250 million [U.S. new crop soybean carryout], is actually a little bit of a negative number, but USDA did about what I expected, and when you look at the average trade guesses, approximately what most of the trade expected," said Jack Scoville, analyst with Price Futures Group in Chicago.

 

On the world balance sheet, the USDA lowered the 2008-09 carryout to 41.04 million tonnes, from last month's estimate of 41.85 million, and raised the 2009-10 carryout to 51.83 million tonnes from 51.02 million.

 

Tight old crop inventories will continue to lend support to old crop contracts, and the uncertainty of a long growing season should provide a floor for new cop prices as well, analysts said.

 

Meanwhile, the DTN Meteorlogix weather forecast said there is a mostly favorable weather pattern for developing corn and soybeans in the U.S. Midwest. Hot temperatures, if any, will be brief and mainly confined to west and southern areas.

 

In demand news, USDA announced Friday private export sales of 110,000 metric tonnes of soybeans for delivery to China in the 2009-10 marketing year.