U.S. soybean futures are poised to climb for the fourth consecutive day Friday, rising on renewed China demand and concerns about supply disruptions in Argentina.
In overnight trading, Chicago Board of Trade March soybean futures were 7 cents higher at $14.12 1/2 a bushel, May soybeans, the most active contract, was up 7 cents at $14.19. New crop November futures were up 4 1/2 cents at $13.67. Analysts expect soybeans to open 5-7 cents higher.
The market is continuing to adjust prices in an effort to ration some usage, with historically tight end-of-year supplies forecast. Fresh export sales and the uncertainty about the near-term future of Argentina soy exports amid port strikes and potential government crack downs on exporters for unpaid taxes is seen supporting prices.
"Questions about the availability of supplies from Argentina, or future disruption of their grain movement raises fears that world importers will shift some demand to the U.S.," said Mike Zuzolo, president Global Commodity Analytics and Consulting.
With historically tight projected U.S. supply forecasts, any increase in demand raises the need to ration usage, Zuzolo added.
The U.S. Department of Agriculture announced Friday private exporters reported optional origin sales of 120,000 metric tons of soybeans for delivery to China during the 2010-2011 marketing year.
After a recent break in prices, China has shown renewed interest in securing U.S. soybeans, particularly with rains delaying harvests in Brazil. The market had previously stumbled on China shifting its buying interest to South American origins.
Brazil and Argentina are the world's second- and third-largest producers of soybeans, respectively, behind the U.S. and are counted on to relieve the strain on tight U.S. supplies.
Argentina's federal tax agency on Thursday suspended three leading multinational companies from a key registry for grain traders. The suspension will cause the tax burdens of Cargill Inc., Archer Daniels Midland Corp. (ADM) and Toepfer International GmbHp to jump sharply if they don't pay up the amounts the agency says is owed in back taxes that were fraudulently evaded.
Further support is seen from higher energy prices and record high cotton prices. Crude oil influences oilseeds due to their use in making renewable fuels. Higher cotton prices rekindle soybean's battle with cotton for 2011 planted acres in the U.S. Delta, Zuzolo said.
Insufficient increases in acreage will require higher-than normal crop yields come summer, if another year of tight supply is to be avoided.
Traders will also watch the release of world grain and oilseed supply and demand estimates from private analytical firm Informa Economics at 10:30 a.m. CST.