U.S. soybean futures are poised for a higher start Wednesday, supported by concerns weather could hamper 2011 acreage and yield potential.
CBOT soybeans are called to open 5 cents to 7 cents higher.
In overnight trading, Chicago Board of Trade July soybeans were up 0.4% at $13.78 1/4, and new crop November futures were up 0.5% at $13.61.
The market is expected to garner support from planting concerns, as slowed seeding progress in the eastern Midwest and northern plains raise issues of potential acreage and yield losses the longer farmers are kept out of their fields.
Rain and storms moving through the central U.S. raise fears of further planting delays, a scenario bolstering supportive outlooks, as tight supplies place increased pressure on U.S. farmers to produce bumper crops in 2011, analysts said.
The Telvent DTN weather forecast said rain, thunderstorms and cooler conditions will keep planting progress for corn and soybeans slow into the weekend period. "A drier, much warmer trend early next week would be more favorable...especially through the flooded fields of the east and south Midwest region," Telvent said in the forecast. Major delays in planting continue in Indiana and Ohio with some corn acreage likely not getting planted, Telvent added.
The possibility of an early harvest this year is becoming less likely due to the fact the region of the U.S. that sees the most early harvest activity has had flooding issues, said Karl Setzer, analyst with MaxYield Cooperative in West Bend, Iowa. This is an underpinning feature for nearby contracts, as end users such as processors attempt to secure enough supplies that will cover needs until the Midwest harvest come on line in October, analysts said.
However, prices are expected to continue to hold within recent trading ranges as slower export and domestic demand continue to limit upside movement in prices. Record harvests in South America have tempered 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.
Meanwhile, traders are also expected to look beyond the soybean market to the outside markets for guidance. Lower crude oil futures and a higher U.S. dollar index are expected to limit advances.