August 12, 2008

 

CBOT Soy Outlook on Tuesday: Down 3-7 cents; corn weakness trumps USDA data

 

 

Soybean futures on the Chicago Board of Trade soybean futures are seen starting Tuesday's day session on the defensive, pressured by spillover weakness from corn futures and worries of general commodity liquidation.

 

CBOT soybean futures are called 3 to 7 cents lower.

 

The soybean market received some bullish data from the U.S. Department of Agriculture, but with the crop weeks behind schedule, the trade is taking the production data with a grain of salt, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Weakness from corn futures and a commodity sector that is still in a general liquidation phase is seen pressuring prices in early action, traders said.

 

Corn is seen weighing on the entire grain and oilseed complex, with traders keenly watching how the market reacts to the corn opening, Roose said. Typically corn will pull soybeans down, and the market will be very careful of getting too bullish on soybeans with yields uncertain and weather conditions still favorable for development, Roose added.

 

Otherwise, the trade will keep an eye on outside markets for sign of further commodity liquidation, before the trade shifts its focus to the lateness of the crop heading toward the Labor Day holiday, analysts said.

 

USDA reported 2008-09 soybean production at 2.973 billion bushels, down from the July estimate of 3.000 billion. The average of analysts estimates anticipated a crop size of 3.003 billion bushels. The USDA estimated 2008-09 soybean planted acreage at 74.8 million acres, up from 74.5 million in July. Harvested acres were pegged at 73.3 million acres, up from 72.1 in July. The 2008-09 U.S. soybean yield was estimated at 40.5 bushels per acre down from July estimate of 41.6.

 

The USDA forecast 2008-09 U.S. soybean ending stocks at 135 million bushels, compared to 140 million in July and the average analyst estimate of 142 million. The USDA pegged 2007-08 soybean stocks at 135 million, up 10 million from in July. The average of analysts' pre-report estimates was 130 million.

 

2007-08 exports were unchanged at 1.145 billion bushels. Crush was lowered 10 million bushels to 1.830 billion reflecting a slowdown in domestic soybean meal disappearance, USDA reported.

 

A technical analyst said the next upside price objective for November soybeans is to push and close prices above solid technical resistance at US$12.50 a bushel. The next downside price objective is pushing and closing prices below solid technical support at the May low of US$11.64 3/4.

 

First resistance for November soybeans is seen at Monday's high of US$12.02 and then at US$12.25. First support is seen at Monday's low of US$11.68 and then at US$11.64 3/4.

 

The USDA said Monday the good-to-excellent condition rating for the U.S. soybean crop was 63%, unchanged from last week. The USDA said 88% of the U.S. soybean crop has bloomed, up from 78% last week but below the five-year average of 94%. The government reported 60% of the soybean crop was setting pods, up from 37% last week but still behind the average of 75%.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange rose Tuesday on a technical rebound and on Monday's gains in counterparts on CBOT. The benchmark January 2009 soybean contract settled RMB6 higher at RMB3,934/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange reached a new 10-month low Tuesday on fears that good prospects for soybean crops would cool demand for palm oil, said trade participants. The benchmark October contract on Bursa Malaysia Derivatives ended MYR110 lower at a new 10-month low of MYR2,561 a metric tonne.