August 24, 2009

 

CBOT Soy Outlook on Monday: 15-20 cents higher on frost fears, robust exports

 

 

Soybean futures on the Chicago Board of Trade are expected to open 15 cents to 20 cents higher on robust exports and speculation that an early freeze may slash the U.S. harvest.

 

In electronic trading, September soybean futures were up 20 cents to US$10.43 a bushel, and November futures were up 17 cents at US$9.90, after reaching US$9.97 1/2, the highest intraday price since US$10.31 Aug. 14.

 

After a wet spring delayed planting, corn and soybean development is a few weeks behind in much of the Midwest. Plants need an extended growing season with summer-like weather to reach full maturity, analysts said. An early frost could bring the growing season to a premature end, hurting yields.

 

"The maturity of the crop is coming into question for these late beans," said Dax Wedemeyer, a broker/analyst with U.S. Commodities, Inc., in West Des Moines, Iowa. "The next couple of weeks are pretty critical. The weather needs to be non-threatening."

 

As of Aug. 16, 72% of the U.S. soybean crop was setting pods, below the average of 85%, according to the U.S. Department of Agriculture. The USDA is scheduled to release its next weekly crop progress report Monday afternoon.

 

The first "killing" frost in the Midwest usually arrives from late September through mid-October, meteorologists said.

 

"With the tight supplies, you need a good crop to keep soybean (prices) near these levels," Wedemeyer said. With an early, widespread Midwest frost, "you could see soybeans take out the 2009 highs we had earlier this year."

 

November futures reached a contract high of US$10.99 1/2 on June 11. November soybeans also have resistance around US$10.50, Wedemeyer said. For support, last week's lows, around US$9.40, are "where end-user buying kicks in," he said.

 

Brisk foreign demand, especially from China, is also boosting the soy complex, analysts said. China bought a total of 896,000 metric tonnes of U.S. soybeans last week, Benson Quinn Commodities Inc. said in a report.

 

"You had big China buying last week, and hopes for more this week," said Brian Hoops, president Midwest Market Solutions, Inc., in Yankton, S.D.