September 9, 2009

 

CBOT Soy Outlook on Wednesday: Down 4-8 cents; big crop, lack of weather threat

 

 

The absence of a weather threat to developing crops and the potential for large production estimates in Friday's crop report have Chicago Board of Trade soybean futures poised for a lower start to Wednesday's day session.

 

CBOT soybean futures are seen opening 4 cents to 8 cents lower.

 

Without a strong bullish influence from outside financial markets, the potential for a bumper 2009 crop looms over the market, analysts said.

 

"The lack of a frost/freeze threat to U.S. soybean crops raises the prospect of big crops getting bigger, and that will keep prices on the defensive as the market looks ahead to Friday's crop report from U.S. Department of Agriculture," said Victor Lespinasse, analyst with Grainanalyst.com.

 

However, solid demand and the need for the 2009 crop to continue to develop into October without a weather threat, provides some uncertainty to limit downside risks, he added.

 

A technical analyst said first resistance for November soybeans is seen at Tuesday's high of US$9.43 and then at US$9.50. First support is seen at US$9.25 and then at Tuesday's low of US$9.10 1/2.

 

The T-storm Weather forecast said temperatures in the central U.S. will stay seasonably mild over the next week. A few thunderstorms will linger in the region through Thursday, but from Friday into next week the forecast becomes complex as a large storm system disconnects from the jet stream, T-storm Weather said.

 

Meanwhile, USDA on Wednesday announced private export sales of 110,000 metric tonnes of soybeans for delivery to China in the 2009-10 marketing year.

 

USDA lowered its good-to-excellent rating for soybeans to 68% from 69% last week. A year ago, 57% of the crop was seen as good to excellent. The rating in Iowa slipped to 75% from 76% last week, while Illinois' rating remained unchanged at 60%, the USDA said. Minnesota and Nebraska also saw their ratings fall one percentage point each, to 68% and 77%, respectively.

 

Seven percent of soybeans were dropping leaves as of Sunday, down from 9% last year and the average of 18%, the USDA said. In Iowa, 4% of the crop was dropping leaves, on par with last year but down from the average of 14%.

 

In overseas markets, China's weekly auctions of soybeans from state reserves hit the highest volume Wednesday due to increased purchases on concerns of a drop in output. The government sold 29,300 metric tonnes of the crop in this week's sale, or 5.9% of the 497,900 tonnes it offered, the highest since the program began in end-July.

 

China's soybean imports in September are likely to remain comparatively low at 2.48 million metric tonnes, according to a report by the Ministry of Commerce. The country is estimated to have imported 2.41 million tonnes of soybeans in August, said the ministry, the lowest monthly volume so far this year.

 

Crude palm oil futures on Malaysia's derivatives exchange slid Wednesday, tracking fears of lower exports amid higher production and stocks, said trade participants. The benchmark November CPO contract on the Bursa Malaysia Derivatives ended down MYR31 at MYR2,179 a metric tonne.