June 30, 2008

 

CBOT Soy Outlook on Monday: Lower; USDA report seen bearish

 

 

Chicago Board of Trade soybean futures are seen starting Monday's day session on the defensive, backpedalling on bearishly perceived acreage and quarterly stocks data released by U.S. Department of Agriculture.

 

CBOT soybean futures are called to start the session 5 to 10 cents lower.

 

"From a numbers standpoint, the report was a bit bearish, said Don Roose president U.S. Commodities in West Des Moines, Iowa. The USDA showed acreage data higher than the average trade guess, and it shows that at these high prices, farmers wanted to keep planting despite rain delays, he said. However, the acreage data may not be as bearish as it looks on the surface, as the market will have to factor in what the yield potential will be on a lot of these late planted crops," Roose added.

 

The USDA estimated U.S. soybean planted area for 2008 at 74.5 million acres, up 17% from last year, but down from the March prospective plantings estimate of 74.793 million. Area for harvest, at 72.1 million acres, is up 15% from 2007.

 

Analysts surveyed by Dow Jones Newswires estimated average soybean acreage at 74.203 million acres. The estimates from the 18 analysts surveyed ranged between 71.965 million and 76.000 million acres.

 

U.S. planted area for soybeans is the third largest on record. The largest increase is expected in Nebraska, up 950,000 acres from 2007, followed by Illinois and South Dakota, both up 900,000 acres. Increases of at least 800,000 acres are also expected in Indiana, Iowa, and Minnesota.

 

Nationally, farmers reported that 79% of the intended soybean acreage had been planted at the time of the survey interview, which is the lowest since 1996, USDA said in the report.

 

Extensive rains and flooding during June caused producers in several Midwestern states to change their harvesting intentions for crops already planted. USDA collected most of the data for the annual acreage report before the majority of the flooding occurred. In an effort to more accurately determine how many acres producers still intend to harvest for grain, USDA re-interviewed approximately 1,200 farmers June 23, 24, and 25 in the flood-affected areas. As a result, it was determined that U.S. farmers intend to harvest 96.8% of their planted acres of soybeans. Without this additional survey data, historical averages would have indicated 98.7% of soybean acres to be harvested.

 

However, traders will have to contend with outside market influences, with higher energy prices expected to lend support to futures. Nevertheless, traders said the data was a negative in all categories of the USDA's reports.

 

Soybeans stored in all positions on June 1, 2008, totaled 676 million bushels, down 38% from June 1, 2007. Indicated disappearance for the March - May 2008 quarter totaled 758 million bushels, up 9% from the same period a year earlier.

 

Analysts surveyed by Dow Jones Newswires expected USDA to report soybean stocks at 669 million bushels in its quarterly Grain Stocks report. Estimates ranged from 615 million to 743 million. Stocks as of March 1 totaled 1.428 billion.

 

The stocks data was bearish for soybeans as well, as it shows high prices started to ration demand, Roose said.

 

A technical analyst said the next upside price objective for the bean bulls is to push and close prices above major psychological resistance at US$16.00 a bushel. The next downside price objective for the bears is pushing and closing prices below solid technical support at last week's low of US$14.73 3/4.

 

First resistance for November soybeans is seen at Friday's contract high of US$15.79 and then at US$16.00. First support is seen at Friday's low of US$15.51 and then at US$15.40.

 

The DTN Meteorlogix weather forecast said rainfall during the past few days in the U.S. Midwest appears to have been slightly less than expected. The next chance for significant rains this Wednesday and Thursday appears to be more for the southern and eastern areas than the northwest. This may allow for some improvement to the very wet conditions in the western Midwest region.

 

On tap for Monday, USDA is scheduled to release its weekly export inspections report at 11 a.m. EDT and its weekly crop progress report at 4 p.m. EDT.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled mixed Monday ahead of the U.S. Department of Agriculture's planting report to be released tonight. The benchmark January 2009 soybean contract settled RMB4 higher at RMB5,123 a metric tonne, up 0.1%, after trading in the RMB5,105-RMB5,148/tonne range.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Monday in thin trade that swung both ways as gains in soyoil and crude oil clashed with weak palm oil export data, said trade participants. The benchmark September contract on the Bursa Malaysia Derivatives ended MYR25 down at MYR3,598 a metric tonne, off an intraday high of MYR3,629/tonne.