November 10, 2009

 

CBOT Soy Outlook on Tuesday: Down 7-10 cents, bearish USDA production data

 

 

Chicago Board of Trade soybean futures are expected to start Tuesdays day session on the defensive, reflecting bearish production and supply/demand data released by U.S. Department of Agriculture.

 

CBOT soybean futures are seen starting 7 cents to 10 cents lower.

 

The USDA report provided some fundamentally bearish influences for the market, and with outside markets commodity neutral in early action, lower price action is forecast.

 

"The report was clearly negative for soybeans from a production standpoint, domestically and for the world. Increased (soy) output in the U.S. and South America is projected to grow inventories," said Don Roose, president U.S. Commodities.

 

U.S. Department of Agriculture projected 2009 U.S. soybean production at 3.319 billion bushels with a yield of 43.3 bushels per acre. The production figure was above the average Dow Jones survey estimate of 3.269 billion, with yields above the average estimate of 42.7.

 

The yield is up 0.9 bushel from last month and up 3.6 bushels from 2008. If realized, this will be the highest U.S. yield on record, USDA said in the report. Area for harvest in the U.S. is forecast at 76.6 million acres, unchanged from last month but up 3% from 2008.

 

In October the USDA estimated the crop at 3.25 billion bushels using a yield of 42.4 bushels per acre.

 

Good harvest progress is expected to add to the defensive theme, but solid demand, solid underlying technical chart support and outlooks for harvest pressure to subside amid the advanced stage of the harvest may limit downside pressure, analysts added.

 

A market technician said first resistance for January soybeans is seen at Monday's high of US$9.74 3/4 and then at US$9.80. First support is seen at US$9.62 and then at US$9.50.

 

Meanwhile, the USDA projected 2009-10 soybean ending stocks of 270 million bushels, up 40 million from the October estimate of 230 million. Analysts on average estimated ending stocks of 235 million bushels.

 

Soybean exports were raised 20 million bushels to 1.325 billion due to increased supplies and increased global import demand, mainly for China, EU-27, and Russia. South American production was raised, with Brazil soybean output forecast up 1 million metric tonnes to 63 million and Argentina production forecast raised 500,000 tonnes to 53 million.

 

The USDA said Monday that U.S. soybeans were 75% harvested as of Sunday, up from 51% last week but below the average of 92%, the USDA said. Traders had expected harvest to be roughly 71% to 78% complete.

 

In Iowa, 83% of the crop was harvested, up from 54% last week but below the average of 99%, according to the USDA. Indiana's crop was 81% harvested, up from 63% last week but down from the average of 94%. In Illinois, soybeans were 69% harvested, up from 35% but down from the average of 96%.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled marginally lower Tuesday, along with declines in metals and fuel oil futures in Shanghai. The September 2010 soybean contract settled RMB3 a metric tonne lower at RMB3,716/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Tuesday as higher stocks and rising production weighed on prices, even as exports performed above expectations. The benchmark January contract on the Bursa Malaysia Derivatives ended MYR24 lower at MYR2,242 a metric tonne.