August 12, 2009

 

CBOT Soy Outlook on Wednesday: Steady, up; supportive crop report, fundamentals

 

 

Soybean futures on the Chicago Board of Trade are expected to start Wednesday's day session with a steady to firm undertone amid a supportive crop report and bullish underlying fundamentals.

 

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

 

Crop production and yield estimates were below average trade estimates, and with lower domestic and world stocks, futures are poised to start higher, analysts said.

 

On the surface the report was as expected, but beans did not have any bearish data, said Victor Lespinasse, analyst with Grainsanalyst.com.

 

Supportive fundamentals will continue to underpin prices, with fresh export sales to China and the uncertainty of a crop that needs an extended growing season in the eastern Midwest is expected to keep sellers cautious, traders said.

 

U.S. Department of Agriculture projected 2009 U.S. soybean production at 3.199 billion bushels with a yield of 41.7 bushels per acre. The production figure was below the average Dow Jones survey estimate of 3.213 billion, with yields below the average estimate of 42.1.

 

Soybean production is forecast at a record, up 8% from last year. Based on August 1 conditions, yields are up 2.1 bushels from 2008. If realized, this will tie for the fourth highest yield on record, according to USDA. With the exception of Illinois, yields are forecast higher or unchanged from last year across the Corn Belt and Great Plains.

 

"USDA showed that the bean situation is going to continue to be very, very tight, particularly in light of the tremendous export demand we continue to get out of China," said Jim Hemminger of Top Third Ag Marketing. "The [expected U.S. soybean] yields were cut a little bit more than expected," he added.

 

USDA said 2008-09 U.S. soybean ending stocks of 110 million bushels, unchanged from its July estimate, but above the average analyst estimate of 106 million bushels.

 

U.S. soybean exports for 2008/09 are projected at 1.265 billion bushels, up 5 million from last month. USDA raised its crush estimate by 5 million bushels to 1.660 billion bushels. USDA also trimmed residual use by 9 million bushels to 48 million.

 

The USDA projected 2009-10 soybean ending stocks of 210 million bushels, down from the July estimate of 250 million. Analysts on average estimated ending stocks of 221 million bushels.

 

USDA also announced private export sales of 113,000 metric tonnes of soybeans for delivery to China in the 2009-10 marketing year. Of that total, the USDA said, 58,000 tonnes "had previously been reported as sales to unknown destinations."

 

A market technician said first resistance for November soybeans is seen at Tuesday's high of US$10.42 and then at US$10.49 3/4. First support is seen at US$10.25 and then at US$10.05.