September 30, 2009

 

CBOT Soy Outlook on Wednesday: Down 5-10 cents, larger stocks, big new crop

 

 

Traders at the Chicago Board of Trade anticipate a lower start to day session activity in soybean futures amid bearish supply data and big new crop outlooks.

 

CBOT soybean futures are seen starting 5 to 10 cents lower.

 

A higher-than-expected quarterly grain stock figure from U.S. Department of Agriculture is seen adding pressure an already bearish new crop supply picture, analysts said.

 

Favorable finishing weather for late developing soybean crops in the heart of the Midwest remains a bearish feature for prices.

 

Quarterly soybean stocks in the fourth quarter of the 2008-09 marketing year were estimated at 138 million bushels as of Sept. 1, the USDA reported, above the average analyst estimate of 111 million bushels and the 110 million bushel carry out in the September supply and demand report.

 

"Probably the surprise of the report is that the soybean ending stocks are bigger than we thought," said Roose.

 

2008 soybean production was revised to 2.97 billion bushels, up 7.83 million bushels from the previous estimate. Harvested area is revised up 40,000 acres to 74.7 million acres. The 2008 yield, at 39.7 bushels per acre, is up 0.1 bushel from the previous estimate.

 

Traders said the upward adjustment in the 2008 crop was not a surprise, based off the 33 million bushel residual use figure plugged into the 2008-09 balance sheet. Particularly with export demand moving a higher clip than USDA weekly data showed, a CBOT floor trader said.

 

"We think that larger numbers, coupled with harvest coming at us, ends up trying to press the market," Roose said.

 

However, strong underlying demand, and tight availability of near term supplies until the fall harvest gets into full swing remains a supportive feature, limiting near term downside risks.

 

A technical analyst said first resistance for November soybeans is seen at Tuesday's high of US$9.28 3/4 and then at this week's high of US$9.37 1/4. First support is seen at Tuesday's low of US$9.10 1/2 and then at last week's low of US$9.02.

 

The T-storm Weather forecast said most crops in the U.S. Midwest were not affected by a killing frost Wednesday morning, and no frost damage expected tomorrow. However, rain through Friday and early next week will slow drying for most corn/soybeans.

 

Temperatures will average cooler to much-cooler than usual over the next 7-10 days. Frost may affect the Northern Plains this weekend, with some possible later next week in the Corn Belt, T-storm Weather said in the forecast.

 

In overseas markets, soybean futures fell for a sixth consecutive trading day Wednesday on the Dalian Commodity Exchange, slipping on the prospect of a record U.S. crop putting bearish pressure on import prices. The benchmark May 2010 soybean contract settled 0.4% lower at RMB3,548 a metric tonne.

 

China sold 2,000 metric tonnes of soybeans, or 0.4% of the volume offered from state reserves in a weekly auction Wednesday, the National Grain and Oil Information Center said in a statement on its Web site. Crude palm oil futures on Malaysia's derivatives exchange ended little changed Wednesday, with external cues pulling both ways and profit-taking pushing prices lower. The benchmark December CPO contract on the Bursa Malaysia Derivatives ended MYR2 lower at MYR2,103 a metric tonne, after moving in a MYR2,096-MYR2,121/tonne range.