November 9, 2007

 

CBOT Soy Outlook on Friday: Up 2-4 cents on USDA data; outside markets eyed

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session firmer, feeding off supportive U.S. Department of Agriculture data, but movement in outside markets remain key to early direction, analysts said.

 

The U.S. dollar index is lower along with crude oil and metal futures.

 

CBOT soybean futures are called to start the session 2 to 4 cents higher.

 

Smaller than expected production forecasts are expected to provide an early boost to soybeans, traders said. Underlying export demand and technical strength will aid the positive tone as well, traders added.

 

However, analysts say the USDA data will be quickly absorbed with movement in outside markets taking over for the course of the day.

 

"The crop report provided nothing big, confirming the anticipation of positive numbers. Outside markets, particularly crude oil, will probably be a bigger influence on prices than the crop report," said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

USDA pegged 2007-08 soybean production at 2.594 billion bushels versus the average of trade estimates at 2.606 billion. Soybean yield is projected at 41.3 bushels per acre, down 1/10 of a bushel from the October yield. The projection was down 1.4 bushels from 2006's yield and below the average of trade estimates at 41.5.

 

USDA said compared with last month, yields are forecast higher in Indiana, Michigan, Texas, and most of the Mid-Atlantic region as producers are realizing higher yields than expected. In contrast, yield prospects decreased or were unchanged across the remainder of the nation as harvest progressed. Area for harvest in the U.S. is forecast at 62.8 million acres, unchanged from last month but down 16% from 2006.

 

USDA projected U.S. 2007-08 soybean ending stocks at 210 million bushels, down 5 million from the October forecast and below the average of trade estimates at 213 million bushels.

 

USDA announced Friday private export sales of 115,000 metric tonnes of soybeans for delivery to China in the 2007-08 marketing year.

 

A technical analyst said soybean bulls still have the solid near term technical advantage. The next upside price objective for January soybeans is to push and close prices above solid technical resistance at the contract high of US$10.51. The next downside price objective is closing prices below strong support at US$10.25, which is the bottom of an upside price gap on the daily bar chart.

 

First resistance for January soybeans is seen at the contract high of US$10.51 and then at US$10.60. First support is seen at Thursday's low of US$10.35 and then at US$10.31.

 

November soybean deliveries totaled 110 lots. The house account at Term Commodities issued all 110 lots, with a customer account at Bank of America Securities the primary stopper of 106 lots. The last trade date assigned was October 26.

 

In other news, Brazil's soy crop is expected to increase to 75.3 million metric tonnes in 2017-18 compared to 59.4 million tonnes in 2007-08, Brazil's agricultural ministry said Thursday. The study results are preliminary and should be finalized in 10 days, according to a ministry of agriculture press officer.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Friday, eyeing the final crop production report to be released USDA. The benchmark May 2008 soybean contract settled RMB20 lower at 4,491 a metric tonne.

 

Cash soybean prices in China continued to surge in the week to Friday as processing plants offered to buy at higher prices to attract sellers.

 

Crude palm oil futures on Malaysia's derivatives exchange were slightly lower Friday in lackluster trade, amid speculation of a minor slowdown in exports, market participants said. The benchmark January CPO contract on Bursa Malaysia Derivatives ended MYR10 lower at MYR2,990/tonne after reaching an intraday high of MYR3,013/tonne.