July 23, 2009

 

CBOT Soy Outlook on Thursday: Higher on positive data, short-covering

 

 

Soy complex futures at the Chicago Board of Trade are called to open higher Thursday, on some short-covering and on price-friendly market data hitting the newswires.

 

Soybeans are called to open 6 to 10 cents higher. Meal is called up US$2.00 to US$5.00 and soybean oil is called to open up 10 to 20 points.

 

Corn is expected to be the grain futures complex leader Thursday, said Victor Lespinasse, longtime market analyst with www.grainanalyst.com. News that the U.S. Department of Agriculture will adjust corn acreage figures in the Aug. 12 crop production report did give corn prices a boost, as it's widely expected USDA will adjust down the total U.S. corn planted acres in that report.

 

Thursday morning's NOPA soybean crush report showed the June U.S. crush at 140.169 million bushels. This compares with 146.244 million bushels in May. Soyoil stocks were pegged at 3.403 billion pounds compared with 3.235 billion pounds in May. Meal stocks in June were pegged at 417,935 short tonnes versus 577,599 short tonnes in May.

 

According to average pre-report trade guesses, Census Bureau data were expected to show June soybean crush totaled 138.36 million bushels. Meal stocks are guessed at 439,600 short tonnes and soyoil stocks were estimated at 3.36 billion pounds.

 

"The crush data is a little better than expected," said Lespinasse. Said another Midwest-based market analyst: "Either USDA is too low or the crush pace must slow, which it historically does, over the last two months of the marketing year. Tight old-crop soybean supplies will force the crush pace to slow in July and August," he said. "Meal stocks were under expectations and soyoil stocks were above expectations, which could lead to some spreading in the product markets," said the Midwest analyst.

 

The weekly USDA export sales report showed U.S. soybean export sales for 2008-09 at 320,000 metric tonnes, with 2009-10 sales pegged at 382,000 metric tonnes. This was at the upper end of trade expectations, which is also price-friendly for soybean and soybean meal futures, Lespinasse said.

 

USDA also announced Thursday morning a sale of 116,000 metric tonnes of U.S. soybeans to China in the 2009-10 marketing year.

 

China's auction of 500,000 metric tonnes of state-owned soybean reserves on Thursday failed to attract any bids, reports said. As a result, talk is now circulating the Chinese government may offer subsidies to crushers as early as Friday in an effort to bolster soybean prices and aid local crushers. Soybean futures on the Dalian Commodity Exchange in China closed higher Thursday on the news.

 

However, gains in the soybean complex futures will once again be tempered by weather in the U.S. Corn Belt "that couldn't be better" for growing a soybean crop, Lespinasse said. Scattered, timely rain showers recently, along with normal to slightly below normal temperatures, and more of the same in the forecast, are a strong trump card held by the bears.

 

Technically, November soybean prices are still in a five-week-old downtrend on the daily bar chart. The next upside price objective for the bean bulls is to push and close November prices above solid technical resistance at US$9.75 a bushel. The next downside price objective for the bears is pushing and closing prices below solid technical support at the July low of US$8.81 1/4 a bushel.