December 9, 2005

  

CBOT Soy Outlook on Friday: Seen lower following USDA report

 

 

Soybean futures on the Chicago Board of Trade are seen starting Friday's open auction session on the defensive, following a bearishly construed supply and demand report from the U.S. Department of Agriculture.

 

Analysts call soybeans to open 5 to 10 cents per bushel lower.

 

The bearish nature of the USDA's report for grain and oilseeds is expected to keep CBOT agricultural futures feeding off each other in early action, analysts said. U.S. soybean ending stock projections came in above the average of trade estimates and exports were lowered more than the trade anticipated.

 

"Even though some analysts projected the carryout to swell above 400 million bushels, the sight of a 4 in front of the ending stock figure sends bearish signals to the market," said a CBOT commission house broker.

 

The USDA projected 2005-06 U.S. soybean ending stocks at 405 million bushels, above the average trade estimate of 386 million, and near the high end of analyst estimates that spanned from 337 million to 450 million.

 

The increase in endings stocks was attributed to a 55 million bushel increase in U.S. exports. Competition from South America soybean exports continues to limit U.S. trade prospects, especially to the EU 25 and China, USDA said.

 

USDA said US export commitments through early December are at the lowest level since 1998.

 

The USDA on Friday also raised its 2005-06 forecasts for soyoil production. The soyoil production forecast is now increased to 19.865 billion pounds, up from the 19.435 billion pounds predicted in November. The increase in soyoil production is based on sharply higher extraction rates. Soyoil beginning and ending stocks were raised by 8 million pounds and 438 million pounds, respectively.

 

USDA said world soybean ending stocks were raised to 48.11 million metric tonnes, up from November's forecast of 46.75 million.

 

Market technicians said first resistance for January soybeans is seen at US$5.68--Thursday's high--and then at US$5.75 1/2. First support is seen at US$5.60--Thursday's low--and then at US$5.53 1/2--this week's low.

 

Meanwhile, the DTN Meteorlogix Weather Service said drier conditions will persist through southern crop areas of Brazil during the next 7 days, with a chance for showers from central Parana northward. In Argentina, no widespread shower activity is expected during the next 7 days.

 

A total of 452 delivery notices were redelivered against the December soyoil contract, with a customer account at Iowa Grain the primary stopper of 286 lots. The last date assigned was December 8.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Friday, mostly on short-covering ahead of the weekend after Chicago Board of Trade soybeans climbed Thursday. The benchmark May 2006 soybean contract gained RMB32 to settle at RMB2,583 a metric tonne, after trading between RMB2,568/tonne and RMB2,597/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended marginally higher Friday after a subdued, range-bound trading day. The benchmark February CPO contract ended at MYR1,411 a metric tonne, up MYR1 from Thursday after moving between MYR1,404 and MYR1,414.

 

Rotterdam soybeans and soymeal prices were higher, and European vegoils were flat to higher.