CHICAGO (Dow Jones)--U.S. soybean futures are expected to start lower Monday, under pressure from broader based commodity weakness amid the rising value of the U.S. dollar.
CBOT soybeans are called to open 6 cents to 8 cents lower.
In overnight trading, Chicago Board of Trade July soybeans were down 0.5% at $13.73 3/4, and new crop November futures were down 0.3% at $13.47.
The dominant factor impacting the market is the rise in the U.S. dollar, as concerns over the European sovereign debt crisis clouds the picture for global economic growth, said Don Roose, president of Iowa based brokerage U.S. Commodities.
A higher U.S. dollar is a negative influence on prices, as most raw materials are dollar denominated, making it more expensive for foreign buyers to import.
Ongoing fears of corn planting delays in the eastern Midwest and southern U.S. crop acres potentially leading to additional soybean acreage is seen adding pressure to prices. The absence of a fresh demand push for U.S. soybeans is expected to add further weakness to the market.
Slower export and domestic demand continue to limit upside movement in prices. Record harvests in South America have cooled demand for U.S. exports. Freshly harvested South American supplies have increased competition for global soybeans and soy product exports, with cheaper Brazilian supplies an attractive alternative to U.S. supplies.
China, the leading importer of U.S. and global soybeans, has slowed its purchasing of late, as China's soybean demand is reportedly sluggish with port inventories high and supplies at crushing plants at comfortable levels.
A very wet week is on tap for the Midwest and nearby areas, according to a weather forecast from Freese-Notis Weather, Inc. in Des Moines, Iowa. "Most of the substantial rain will be in southern parts of the Midwest for Monday through Tuesday, but will be lifting northward again for Tuesday night to put the heart of the region in wet weather on Wednesday and eastern parts of region will be wet right through Thursday," Freese-Notis said in the forecast.
Yet, soybeans still have the potential to find price support as a tight supply scenario places increased pressure on U.S. farmers to produce bumper crops in 2011.
The soybean market still has a bullish profile, as outlooks for tight projected end of year supplies in 2011 is expected to continue through 2012. Government forecasters have precariously tight projected inventories forecast for the end of the 2011-12 marketing year that ends August 2012, meaning a loss of planted acres or a decline in yields could make supplies very dicey next year, said Roose.
On tap for Monday, the U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11 a.m. EDT and its weekly crop progress report at 4 p.m. EDT.