U.S. soybean futures are poised for a higher start, with tighter supply outlooks and with traders reducing risk ahead of the weekend following Thursday's declines.
Chicago Board of Trade soybeans are called to open up 4 cents to 6 cents.
In overnight trading, CBOT November soybean futures were up 5 1/2 cents at $14.40 a bushel.
Traders anticipate the market will recover some of Thursday's losses, with support from private production estimates that are continuing to drop. Industry analysts are concerned about crop potential, particularly with new-crop soybean end-of-year supplies already forecast at precariously tight levels by government forecasters.
INTL FCStone released its Sept. 1 U.S. production estimates late Thursday, becoming the latest crop forecaster to cut its outlook for U.S. soy production.
INTL FCStone projected U.S. farmers will harvest 3.03 billion bushels of soybeans in 2011, using a yield of 41.05 bushels an acre. The production and yield estimates were down from the firm's August estimates and the U.S. Department of Agriculture's August output forecast for soybeans at 3.056 billion using a 41.4-bushel-an-acre yield.
The lower yield and output forecast is having more of a muted effect on soybeans than corn, as the trade has already dialed in lower yield estimates, said Don Roose, president of Iowa brokerage U.S. Commodities.
Traders are becoming increasingly comfortable with yield estimates near 40 bushels per acre for soybeans, meaning unless there are yields below this in government forecasts, it may be hard to get values to rally from current levels.
Investors are also cautious of taking on added risk ahead of a long holiday weekend, yet traders are mindful that soybean yields still have room to improve, as late-season rains will help soybean pod filling, analysts say.
The influence of external financial markets should limit advances, with lower equities and crude oil futures attracting broader-based selling following the release of the U.S. jobs report.
Industry analysts are concerned about soybean demand holding up in the face of a struggling world economy. Concerns about economic growth, reflective of a U.S. unemployment report showing stalled job growth, will keep traders careful of pushing prices to levels that will cut demand by too much, Roose said.
CBOT grain and oilseed markets will be closed Monday in observance of the Labor Day holiday.