DJ CBOT SOY OUTLOOK: Yield, Production Worries To Boost Prices 30.08.2011
--Higher prices in outside financial markets to lend support to prices
CHICAGO (Dow Jones)--U.S. soybean futures are expected to start higher Monday morning, with declining production potential and a supportive tone in financial markets attracting speculative investment.
CBOT soybeans are called to open up 10 cents to 13 cents. Soybean futures rallied to new contract highs Friday and the extended the advances overnight.
In overnight trading, Chicago Board of Trade new crop November futures were up 13 cents at $14.36 1/2 a bushel.
Soybean prices are poised to expand upon recent advances, with fear U.S. crop yields are "shrinking faster than demand" and stoking buyer enthusiasm, said Don Roose, president of Iowa-based brokerage U.S. Commodities.
Dry weather is trimming yield potential for soybean crops, with only scant amounts of rain reported during the weekend and limited rain potential in the next week raising fear of falling crop potential.
Soybean crops have good potential amid the absence of disease and insect pressure, but need moisture to fill the beans and improve yields.
"At least 1/3 of the Midwest will hold onto dryness through the late fill period for soy, with the driest areas currently including Nebraska South Dakota, southern Minnesota, central & southeastern Iowa, and central Illinois," according to a forecast from Commodity Weather Group.
Traders are already nervous about soybean output after the U.S. Department of Agriculture on Aug. 11 slashed its estimate for yields to 41.4 bushels an acre from its July estimate of 43.4 bushels due to damaging heat.
Industry analysts are concerned about any drop in crop potential, particularly with new crop soybean end of year supplies already forecast at precariously tight levels by government forecasters.
Higher prices in outside financial markets will lend support to prices as well, with U.S. equities, crude oil and gold futures all posting solid gains in early action.
The strength in crude oil and gold continues to give signals of investors putting money into commodities, Roose said.
Large managed funds, including hedge funds, increased their net long position in soybean futures and options traded at the CBOT by 64% to 131,651 contracts, according to data issued Friday by the U.S. Commodity Futures Trading Commission.
On tap for Monday, USDA 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