U.S. soybean futures are poised for a higher start to Friday's day session, as the market finds support after recent declines on end-user demand.
In overnight trading, Chicago Board of Trade March soybean futures were 2 3/4 cents higher at $13.21 a bushel; May soybeans, the most active contract, was up 1 1/4 cents at $13.30 1/2. New crop November futures were up 1/4 cent at $12.86 1/2. Analysts expect soybeans to open 2 cents to 3 cents higher.
"Overnight, futures traded higher as traders are becoming more confident that the market is building a base of support and trying to find a bottom," Midwest Market Solutions' Brian Hoops wrote in a market note.
"Many traders and producers are hoping the market is in the process of finding a seasonal bottom and the ability to hold this week's lows on Thursday added strength to this argument," he wrote in the note.
Despite the recent selloff in prices, soybeans maintain a supportive fundamental outlook with strong demand and tight stocks expected to linger into the next marketing year that begins Sept. 1, underpinning prices.
New sales of soybeans to China, the world leader in soybean imports, added further strength to support prices. The market had previously stumbled on China shifting its buying interest to South American origins. This promoted market sentiment that U.S. soy demand was being rationed, said Mike Zuzolo, president Global Commodity Analytics.
The U.S. Department of Agriculture announced Friday that private exporters reported the sale of 165,000 metric tons of soybeans for delivery to China during the 2011-12 marketing year.
Tight projected 2010-11 end-of-year supplies and the uncertainty of 2011 acreage and weather, leaves little margin for error in new crop production. This is supporting new crop futures, represented by the November contract, particularly after a large break in prices.
Insufficient increases in acreage will require higher-than normal crop yields come summer, if another year of tight supply is to be avoided.
However, soybeans are expected to receive pressure from South American hedging amid increased production estimates for Brazil and Argentina.
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 U.S. supplies in the spring of 2011.
Meanwhile, the USDA's weekly export sales report released Friday said total soybean export sales were a net 252,600 metric tons for the week ended Feb. 17, with only 134,600 tons for delivery in the 2010-11 marketing year that ends Aug. 31. Analysts had forecast sales between zero and 700,000 tons.
Soymeal sales were a net 108,700 tons for the 2010-11 marketing year. Estimates ranged from 75,000 tons to 150,000 tons. Soyoil commitments were a net 1,000 metric tons. Analysts had forecast sales between 10,000 and 30,000 tons.