September 29, 2006

 

CBOT Soy Outlook on Friday: Up 5-7 cents on bullish USDA data

 

 

Soybean futures on the Chicago Board of Trade are expected to begin Friday's day session on firm footing, buoyed by supportive data from the U.S. Department of Agriculture's quarterly grain stocks report.

 

Soybean futures are called to open 5 to 7 cents higher.

 

The USDA provided some bullish inputs for the market, with a cut in old crop production and carryout, analysts said.

 

U.S. Sept. 1 soybean stocks were up 75% from 2005 at 449 million bushels, below the average analyst estimate of 482 million but above last year's 256 million bushels. The USDA revised downward the 2005 soybean crop production 23 million bushels to 3.063 billion bushels.

 

The stocks figure is the largest Sept. 1 soybean stocks figure since 1986, with fourth quarter disappearance totaling 542 million bushels, USDA said in the report.

 

The reports 36 million bushel cut in the 2005-06 marketing year's carryout, and confirmation of market sentiment that the 2005 crop was overstated should provide a little boost to prices, a CBOT trader added.

 

However, soybeans tacked on 10 cents Thursday, and with growing new crop production estimates, traders may view a higher opening as a selling opportunity, particularly if corn and wheat don't extend Thursday's advances, a CBOT floor trader said. Besides, the soybean old crop carryout is still a 75% increase from 2005, especially with new crop estimates edging toward record levels, he added.

 

A technical analyst said that despite Thursday's bounce, soybeans are still the weak sister of the major grains, and it will take a close above technical resistance at the September high of US$5.63 in November beans to provide some fresh upside technical momentum. The next downside price objective is closing prices below solid support at the contract low of US$5.37 1/2.

 

First resistance for November soybeans is seen at US$5.53 1/2 - Thursday's high - and then at US$5.55. First support is seen at US$5.50 and then at US$5.45.

 

The DTN Meteorlogix weather forecast says U.S. Midwest harvest conditions should improve during the next 5-7 days. The western Midwest is forecasted to have mainly dry conditions with only a few very light showers Friday. Conditions will be dry during the weekend, with temperatures averaging below normal Friday, near normal Saturday, and above normal Sunday.

 

In the eastern Midwest, a chance for sprinkles or very light showers through northern and eastern areas of the region is expected Friday and Saturday. Mainly dry conditions are seen for Sunday. Temperatures will average below normal Friday, near to mostly below normal Saturday, and near to above normal Sunday.

 

FCStone released its October U.S. production estimates Thursday, predicting the 2006-07 corn crop at 11.072 billion bushels and the soybean crop at 3.266 billion bushels. The corn crop projection used an average yield of 154.2 bushels per acre, and the soybean crop was forecast with an average yield of 44.2 bushels an acre, FCStone said. The U.S. Department of Agriculture is scheduled to release its latest U.S. corn and soybean production estimates at 7:30 a.m. CDT (1230 GMT) on Oct. 12.

 

In deliveries, a total of 340 delivery notices were posted against October soyoil futures. Issuers were scattered across various commission houses, with a customer account at JP Morgan the principle stopper of 276 lots. The last trade date assigned was September 11.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly higher Friday, supported by gains in CBOT soybean futures. The benchmark January 2007 contract settled at RMB2,544 a metric tonne, up RMB9.