October 12, 2007

 

CBOT Soy Outlook on Friday: Seen up following USDA report

 

 

Soybean futures on the Chicago Board of Trade are seen starting Friday's day session on firm footing, underpinned by supportive crop data from the U.S. Department of Agriculture.

 

CBOT soybean futures are called to start the session 10 to 15 cents higher.

 

The USDA report should provide some bullish inputs to feed the appetites of bullish traders, analysts said.

 

The USDA pegged 2007-08 soybean production at 2.598 billion bushels versus the average of trade estimates at 2.648 billion. Soybean yield is projected at 41.4 bushels per acre, unchanged from the September yield. The projection was down 1.3 bushels from 2006's yield and below the average of trade estimate at 41.9.

 

"This report tells us a couple things. We've got really stinky beans in some parts of the country. I've got a customer over in Indiana who just finished picking everything yesterday, and he said, it was the worst harvest he'd ever had in his life. And spots like that stretch all the way down to Tennessee and Georgia," said Rich Balvanz, analyst with Ag Management Services of Marion, Iowa.

 

"Planted and harvested area are both lowered 0.4 million acres. Total soybean supply is forecast almost unchanged as reduced crop production is nearly offset by increased beginning stocks," USDA said in the report.

 

Meanwhile, soybean oil ending stocks are raised for both 2006/07 and 2007/08, reflecting weaker-than-expected domestic disappearance for food use in 2006/07, USDA added.

 

However, the early calls are seen as a knee-jerk reaction to the USDA report, but after rallying for nearly a week on perceptions of bullish data, the market has priced in a lot of this information and the upside may be limited, a CBOT floor trader added.

 

A technical analyst said market bulls this week have regained solid upside technical momentum. The next upside price objective for November soybeans is to push and close prices above solid resistance at US$9.90 1/2, which is the top of this month's big downside price gap on the daily bar chart. The next downside price objective is closing prices below solid support at US$9.50.

 

First resistance for November soybeans is seen at Thursday's high of US$9.84 and then at US$9.90 1/2. First support is seen at US$9.75 and then at US$9.70.

 

USDA reported weekly soybean export sales were 550,100 metric tonnes for the week ended Oct. 4. The sales were primarily for China with 218,200 metric tonnes, and Mexico with 88,200. Analysts had forecast sales between 600,000 and 900,000 metric tonnes. Soymeal sales were a net 266,000 tonnes, and soyoil commitments were 8,200 metric tonnes.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mixed Friday in shrinking trade, ahead of the USDA's production, supply and demand reports to be released later in the day. The benchmark May 2008 soybean contract fell RMB14 to settle at RMB4,186 a metric tonne.

 

Cash soybean prices in China's major producing regions rose sharply in the past two weeks, as crushers were keen to buy in anticipation of lower output this year, while farmers were reluctant to sell.

 

China's soybean imports in September reached 1.89 million metric tonnes, preliminary data provided Friday by the General Administration of Customs showed. Total imports in January-September rose 2.1% on year to 21.69 million tonnes, it said, without providing the on-year change for September alone.

 

Crude palm oil futures on Malaysia's derivatives exchange rose sharply Friday, with the benchmark contract closing at its highest level on record amid bullish sentiment and positive cues from other commodities. The benchmark December CPO contract on Bursa Malaysia Derivatives ended at MYR2,731 a metric tonne, up MYR51 from Thursday.