December 11, 2007

 

CBOT Soy Outlook on Tuesday: Up; supportive USDA report; bullish trend

 

 

Chicago Board of Trade soybean futures are seen starting Tuesday's session on firm footing, with data from U.S. Department of Agriculture providing fresh support for the bullish market trend, analysts said.

 

CBOT soybean futures are called to start the session 4 to 6 cents higher.

 

The USDA's report provided the latest piece of bullish evidence to keep market bulls in the driver's seat, said a CBOT floor analyst.

 

U.S. soybean ending stocks were trimmed 25 million bushels to 185 million, a 68% decline from 2006-07. The figure was below the average of survey guesses, but within the range of estimates.

 

"The drop in U.S. ending stocks below the 200 million bushel threshold is a wake up call that acres need to be bought to cure tight U.S. supplies, with the cut in world soybean stocks supportive also," said Joe Victor, analyst with Allendale Inc. in McHenry, Ill.

 

U.S. soybean exports were raised 20 million bushels based on stronger-than-expected sales to China, USDA reported. The soybean crush is raised 5 million bushels due to improved soybean meal export prospects, USDA said in the report.

 

Soybean and product prices are raised this month based on rapidly escalating values within each market. The U.S. season-average soybean price for 2007-08 is projected at US$9.25 to US$10.25 per bushel, up 75 cents on both ends of the range, reflecting sharply higher cash and soybean futures prices, USDA said.

 

The large jump in the season average farm price was a supportive surprise for soybeans, Victor added.

 

Technical strength and dryness concerns in parts of South America's soybean belt should aide the higher tone, but traders will watch for signs of upside exhaustion, particularly with most of the bullish news anticipated by the trade, analysts added.

A market technician said the next upside price objective for January soybeans is to push and close prices above psychological resistance at US$12.00 a bushel. The next downside price objective is closing prices below psychological support at US$11.00.

 

First resistance for March soybeans is seen at Monday's contract high of US$11.45 and then at US$11.50. First support is seen at Monday's low of US$11.35 and then at US$11.25.

 

The DTN Meteorlogix Weather Service said the temperature pattern in Brazil's Rio Grande Do Sul soybean areas during the next 10 days is somewhat variable, but the rainfall pattern appears to be below normal. The next chance for thunderstorms in the very dry western belt areas of Argentina doesn't show up until later next week sometime.

 

In deliveries, December soyoil deliveries totaled 546 lots. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was Dec. 10.

 

December soymeal deliveries totaled 877 lots. The house account at Bunge Chicago issued 570 lots, with a customer account at Man Professional Clearing the primary stopper of 364 lots. The last trade date assigned was Dec. 10.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly higher Tuesday after their counterparts on CBOT set new contract highs Monday. The benchmark September 2008 soybean contract settled RMB35 higher at 4,457 a metric tonne.

 

China imported 3.35 million metric tonnes of soybeans in November, up 42.6% from a year earlier, according to preliminary data issued Tuesday by the General Administration of Customs. The country imported 27.89 million tonnes of soybeans during the first 11 months, up 8.1% on year, it said.

 

Crude palm oil futures on Malaysia's derivatives exchange traded higher Tuesday as the government expressed concern that floods in the country's south are likely to affect output. The benchmark February contract ended MYR12 higher at MYR2,880 a tonne.