October 10, 2008

 

CBOT Soy Outlook on Friday: Sharply down; outside markets, USDA data

 

 

Soybean futures on the Chicago Board of Trade are expected start Friday's day session sharply lower, tumbling in unison with overnight trade amid bearish outside market influences and crop data from U.S. Department of Agriculture.

 

Traders called soybeans to open 40-70 cents lower.

 

In overnight electronic trading, November soybeans were 46 cents lower at US$9.34. December soyoil was 192 points lower at 37.87 cents per pound and December soymeal was US$11.50 lower at US$264.50 per short tonne.

 

The collapse in the stock market, in conjunction with USDA numbers that are a little negative when one compares the data to average trade guess, sets the stage for sharp losses in early action, said Jack Scoville, analyst with Price Group in Chicago.

 

The USDA report was bearish, but none the numbers were seen as terribly so, analysts said. However, the outside markets will continue to attract selling as investors attempt to exit anything risky, analysts said.

 

The financial markets are getting pounded, with stock futures tumbling and crude oil futures down over US$7.00 a barrel, reflecting the sentiment in the commodity sector, traders added.

 

USDA reported 2008-09 soybean production at 2.983 billion bushels, up 49 million from the September estimate of 2.934 billion, with increased harvested area more than offsetting a lower projected yield. The average of analysts' estimates anticipated a crop size of 2.920 billion bushels. The 2008-09 U.S. soybean yield was estimated at 39.5 bushels per acre, down from September estimate of 40.0.

 

The USDA forecast 2008-09 U.S. soybean ending stocks at 220 million bushels, up 85 million from last month, and above the average analyst estimate of 188 million.

 

Total soybean supplies are forecast up 111 million bushels with higher crop production and sharply higher beginning stocks. Soybean crush is reduced 25 million bushels to 1.76 billion based on weaker prospective domestic soybean meal demand. Soybean exports are raised 50 million bushels to 1.05 billion due to increased supplies and lower prices.

 

A technical analyst said the next upside price objective for November soybeans is to push and close prices above major psychological resistance at US$10.00 a bushel. The next downside price objective is pushing and closing prices below major solid technical support at this week's low of US$9.11.

 

First resistance for November soybeans is seen at Thursday's high of US$9.90 and then at US$10.00. First support is seen at US$9.65 and then at US$9.50.

 

In deliveries, Oct soymeal deliveries totaled 462 lots. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was October 9.

 

Oct soyoil deliveries totaled 67 lots. Issuers were scattered among various commission houses, while the house account at ADM Investor Services stopped 11 lots. The last trade date assigned was October 8.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled sharply lower Friday, dragged down by Wall Street's relentless downward spiral. The benchmark January 2009 soybean contract settled RMB149 lower, or 4.3%, at RMB3,338/tonne. Cash soybean prices in China's major producing areas were lower in the week ended Friday, tracking the tumble in the futures market as the harvest progresses.

 

Crude palm oil futures on Malaysia's derivatives exchange fell sharply Friday amid spillover downward pressure from soyoil and crude oil, but ended off lows on fall in production and lower-than-expected inventories. The benchmark December contract on Bursa Malaysia Derivatives ended MYR117 lower at MYR1,773 a metric tonne, after reaching an intraday low of MYR1,725, a level not seen in almost two years.