DJ CBOT SOY OUTLOOK: Seen Up On Upbeat External Financial Markets 03.11.2011
--Weaker dollar index, higher energy and equity futures encouraging investors to take on risk.
--Strong cash basis across the U.S. Midwest are aiding the firm price theme
-- Another poor showing in weekly export sales will limit advances
CHICAGO (Dow Jones) - U.S. soybean futures are poised for a higher start Thursday, supported by a more upbeat mood in world financial markets.
Chicago Board of Trade soybean futures are called to open up 20 cents to 22 cents. In overnight trade, CBOT November soybeans climbed 22 cents to $12.15 1/2 a bushel, and the January future rose 19 1/2 cents to $12.22 1/4.
Soybean futures will draw support from firming external financial markets, with a weaker U.S. dollar index, and higher energy and equity futures encouraging investors to take on risk.
A rebound in European markets overnight are providing a more upbeat mood today, but traders are expected to remain cautious as Euro zone troubles remain far from settled, according to a Farm Futures publication market letter.
Strong cash basis levels across the U.S. Midwest and at export terminals are aiding the firm price theme. Farmers are finishing harvest but want to store their remaining inventory as they remember the last two years of price appreciation during the winter and spring months with highs ultimately scored in the summer.
"It appears as if the majority of the liquidation from MF Global has been completed and commercial and end user buying continues to support the market with basis levels remaining firm across the Midwest, said Brian Hoops, president of South Dakota based brokerage Midwest Market Solutions.
Export basis is firm on hopes Chinese demand is set to aggressively move to U.S. shores from South America.
Yet, another poor showing in weekly export sales will limit advances, a feature expected to keep prices hovering within recent trading ranges ahead of next week's government crop forecasts.
U.S. Department of Agriculture reported weekly U.S. soybean export sales of 209,700 metric tons for the week ended Oct. 27, below estimates for 400,000 to 800,000 tons. Sales increases were noted primarily to China.
Otherwise, traders are focusing on the next crop forecast from USDA scheduled for release Nov. 9.
"The slow start to the export season could lead USDA to lower its estimate of sales for the marketing year in next week's monthly report, offsetting the potential for a small drop in soybean production," Hoops added