U.S. soybean futures are poised for a firmer start Tuesday, driven higher by ongoing concerns about lagging planting progress in the eastern U.S. Midwest.
CBOT soybeans are called to open 2 cents to 4 cents higher.
In overnight trading, Chicago Board of Trade July soybeans were up 0.2% at $13.86 1/4 a bushel, and new crop November futures were up 0.3% at $13.76 3/4.
The market should stabilize after Monday's sharp declines, with planting progress at the lowest level since 1996 maintaining enough production uncertainty for traders to keep risk premium in the market, said Don Roose, president of Iowa-based brokerage U.S. Commodities.
U.S. soybean crop was 68% planted as of Sunday, up from 51% a week earlier but behind the average of 82% for that time of year, according to U.S. Department of Agriculture.
Planting continues to lag in Ohio, where 26% of the crop was in the ground, up from 7% a week earlier and behind the average of 88%. In Iowa, however, 94% of the crop was planted, up from 87% a week earlier and ahead of the average of 93% for that time of year.
The lingering delays in soybean planting are not surprising, as farmers were expected to focus their energy on planting corn before soybeans, analysts said. Soybeans can be planted later in the spring than corn without losing as much yield potential.
Of the soybean crop, 44% had emerged as of Sunday, up from 27% a week earlier and behind the average of 61%, according to the USDA.
Precariously tight projected end of year supply forecasts continue to underpin prices. The tight supplies leave little room for error in 2011 production, raising the risk of any lost acres and smaller yields further cutting into the balance between supply and demand.
Traders are also expected to look beyond the soybean market to the outside markets for guidance, with a lower U.S. dollar index adding further support. A lower U.S. dollar is supportive for commodities as most raw materials are dollar-denominated, making it less expensive for foreign buyers to import.
Market participants are also eyeing Thursday's USDA supply and demand forecasts, a feature that may produce some two-sided price action as traders reduce risk exposure ahead of the reports, Roose said. Traders are also cautious of large investment funds shifting positions out of nearby contracts to deferred months, but this action is anticipated, Roose added.
Nevertheless, prices are expected to continue to hold within recent trading ranges as slow export and domestic demand continue to limit upside movement in prices.