DJ CBOT Soy Outlook: Up; Feed Off Wheat Strength, Crop Uncertainty
07/29/2010 08:47AM
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CHICAGO (Dow Jones)--U.S. soybean futures are poised for a firm start to Thursday's day session, feeding off the bullish influence of rallying world wheat prices and the underlying uncertainty of U.S. soybean production.
Overnight, Chicago Board of Trade August soybeans were 6 1/2 cents higher at $10.17 and November soybeans were 6 1/2 cents higher at $9.84 1/2. Analysts expect soybeans to start 4 cents to 6 cents higher.
Concerns about shrinking world wheat production potentially dwindling U.S. supplies if the U.S. can take up some of the export slack is seen underpinning CBOT grain and soy markets.
Smaller available U.S. feed wheat inventories open the door for increased livestock demand for feed such as corn and soymeal, analysts said. Soybeans are crushed or processed into soymeal and soyoil.
Meanwhile, solid underlying demand remains fundamentally supportive for futures, with the lingering uncertainty of U.S. yield and production potential keeping sellers on the sidelines, analysts added.
Soybeans are moving into their key development stage and traders are adding some risk premium in the event of adverse weather emerging to affect crops. August is a critical time for soybeans because that's when the plant sets pods and the beans within them grow, ultimately determining the yield.
The Telvent DTN weather forecast said scattered showers and cooler temperatures will maintain mostly favorable growing conditions for crops through the northwest and central Midwest region, except in areas of local flooding. Some eastern and southern areas could still use rain after a recent drying trend and somewhat hotter temperatures in the area, Telvent added.
A technical analyst said the next upside technical objective is pushing and closing November soybean prices above major psychological resistance at $10.00. The next downside price objective is pushing and closing prices below solid technical support at $9.50.
The U.S. Department of Agriculture reported Thursday total soybean export sales were a net 1,483,200 metric tons for the week ended July 22. A total of 339,000 metric tons were sold for the 2009-10 marketing year, with China the primary buyer of 235,000 tons. A total of 1,144,200 tons were reported for the 2010-11 marketing year. Analysts had forecast sales between 700,000 tons and 1,250,000 tons.
Soymeal sales were a net 66,800 tons. Estimates ranged from 75,000 tons to 175,000 tons. Soyoil commitments were a net 7,500 metric tons. Analysts had forecast sales between 30,000 and 60,000 tons.
-By Andrew Johnson Jr., Dow Jones Newswires; 312-347-4604; andrew.johnsonjr@dowjones.com