November 10, 2005

 

CBOT Soy Outlook on Thursday: Seen lower following USDA report

 

 

Soybean futures at the Chicago Board of Trade are called to open weaker, following the U.S. Department of Agriculture's November crop production report.

 

Analysts call soybeans to open 5 to 8c per bushel lower.

 

The production and ending stocks projections came in above the average of trade estimates, with ending stocks projections above the levels that the market is currently trading, said Mike Zuzolo, chief analyst with Risk Management Commodities Inc. in Lafayette Ind.

 

However, some traders speculate a lower open could be a buying opportunity, as the numbers were within the range of pre-report estimates and were not a surprise. Support may also be derived from a lower world ending supplies forecast, with Brazil's production trimmed.

 

USDA raised 2005-06 production by 76 million bushels to 3.043 billion bushels, and yields were raised to 42.7 bushels per acre from 41.6 estimated in October. The average of trade estimates pegged the crop at 3.016 billion bushels and a yield of 42.3 bushels per acre.

 

Higher production estimates have increased USDA's forecasts for 2005-06 soybean carryout and crush. USDA said the crush was raised due to larger available supplies and higher than expected meal use in recent months. Exports were trimmed by 40 million bushels. Lower than expected sales and shipments particularly to the European Union and China was the catalyst for the reduction, USDA said.

 

The USDA projected 2005-06 U.S. ending stocks at 350 million bushels, above the average trade estimate of 313 million, and at the high end of analyst estimates that spanned from 270 million to 351 million.

 

The USDA on Wednesday also raised its 2005-06 forecasts for soymeal and soyoil production. Soymeal production is now seen totaling 40.913 million short tonnes, up from the 40.375 million short tonnes expected a month ago.

 

The soyoil production forecast is now increased to 19.435 billion pounds, up from the 19.155 billion pounds predicted in October. Soyoil usage was raised 150 million pounds to 19.300 billion. The increase in soyoil usage is attributed to expected increases in biodiesel production. Soyoil beginning and ending stocks was raised by 120 million pounds and 250 million pounds, respectively.

 

USDA said world soybean ending stocks were trimmed to 46.75 million metric tonnes, down from October's forecast of 47.41 million.

 

The USDA said Thursday that 2005-06 marketing year sales totaled 580,100 tonnes, with the primary buyer China at 362,500 tonnes. Pre-report estimates ranged from 550,000 to 800,000 tonnes.

 

Net old/new crop soymeal sales were 80,300 tonnes, a figure below estimates that ranged from 100,000 to 180,000 tonnes. Net sales of 41,200 tonnes were reported for soyoil. Trade guesses called for commitments in a range of 5,000 to 10,000 tonnes.

 

Meanwhile, a total of 387 delivery notices were posted against the November soybean contract, with a customer account at Tenco issuing 255 lots. The primary stoppers were the house account at Term Commodities and a customer account at RJ O'Brien of 242 and 143 lots respectively. The last date assigned was November 4.

 

China imported 1.90 million metric tonnes of soybeans in October, up 21.5% on year, the General Administration of Customs said Thursday. Soybean imports in the first 10 months of the year rose 38.1% to 21.42 million tonnes, the administration said in a notice posted on its Web site.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled moderately higher Thursday, as bouts of speculative buying emerged after prices fell over the past several trading days. The benchmark May 2006 soybean contract gained RMB8 to settle at RMB2,731 a metric tonne, after trading in RMB2,721-RMB2,740/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly higher Thursday, despite reports showing a steep drop in exports and a rise in stocks. The benchmark January CPO contract ended at MYR1,435 a metric tonne, up MYR8 from Wednesday after moving between MYR1,419 and MYR1,441/tonne.

 

Rotterdam soybeans were higher and soymeal prices were mixed, and European vegoils were flat to lower.