October 28, 2008


CBOT Soy Outlook on Tuesday: Boosted by USDA acreage revision



Soybean futures on the Chicago Board of Trade are expected to rally Tuesday, but fall short of meeting the overnight surge, on a bullish crop revision released by USDA.


CBOT soybean futures are called 25-30 cents higher.


In overnight electronic trading, November soybeans jumped 57 1/2 cents higher in overnight trading. January soybeans added 59 1/2 cents to US$9.56 3/4. December soyoil was 206 points higher at 33.78 cents per pound, while December soymeal increased US$13.60 to US$289.90 per short tonne.


The U.S. Department of Agriculture cut its harvested soybean acreage from the 2008-2009 soybean crop by 1.1 million acres in a revised report released Tuesday morning. Yield remained unchanged, but ending stocks for the new crop year were cut as well, to 205 million bushels from 220 million bushels.


The cut was "probably not as dramatic as the market was anticipating," says Jeff Hainline, chairman of Advance Trading. "I wouldn't follow the overnight."


The markets have come off dramatically and are due for a bounce, but the stocks cut was less than the trade had anticipated, he said.


"The whole thing going forward has been the battle of acres because of the RFS mandates," Hainline said.


If one feed stock rallies, the others will follow because of the acreage competition, he said, noting, "They tend to move together at this point."


Soybean bears' next conquest is to close January soybeans below "solid technical support at the October low of US$8.38 1/2," a market technician said, pegging first support at US$8.75.


The bulls must close above solid technical resistance at last week's high of US$9.55 1/2, he said, marking first resistance at Monday's high of US$9.08


The U.S. soybean harvest was 76% complete, up from 67% last week but down from the average of 83%, the USDA said in its weekly crop report released Monday.


Analysts had expected harvest to be 70% to 80% complete.


Farmers have harvested their soybeans first as they wait for the corn to dry, analysts said.


The harvest progress could signal a seasonal low for soybean prices, said Joe Victor, analyst with Allendale. "The trade understands we're behind."


"Historically, when we get three-quarters harvested, we typically try to set a harvest low into these crops," he said.


In Iowa, 87% of the soybean crop was harvested, up from 85% last year but below the average of 94%. In Illinois, harvest was 76% complete, down from 94% last year and the average of 89%.


Harvest weather should be pretty good across the U.S. Midwest for the next week to 10 days, analysts said. Wet weather last week continued to delay farmers, but they are ready or almost ready to resume harvesting, analysts said.


The Midwest can expect mostly dry weather with a few light showers or snow flurries to the east this week, according to DTN Meteorlogix.


Temperatures should range from 20-67 degrees Fahrenheit, DTN said.


In global trading news, China's soybean futures traded on the Dalian Commodity Exchange settled sharply higher Tuesday, boosted by a major rise in Asian stock markets.


The benchmark May 2009 soybean contract settled RMB91 higher at RMB3,266 a metric tonne, or up 2.9%. The contract briefly touched limit-up towards the closing bell.


Crude palm oil futures on Malaysia's derivatives exchange ended 5% higher Tuesday on technical buying as investors took leads from a recovery in exports and rising soyoil prices.


The benchmark January contract on Bursa Malaysia Derivatives ended MYR69 higher at MYR1,459 a metric tonne, after hitting a three-year low of MYR1,331 during intraday trading.