U.S. soybean futures are poised for a lower start to Friday's day session, as traders book profits following a 4.1% jump in prices in the past week.
In overnight trading, Chicago Board of Trade May soybean futures, the most active contract was down 5 cents at $14.05 1/4. New crop November futures were down 5 1/2 cents at $13.89 1/2.
CBOT soybeans are seen opening 3 cents to 5 cents lower.
Soybean futures climbed by 2.8% Thursday after federal forecasters reported lower than expected March 1 stocks and 2011 acreage. The reports were bullish for the market, but futures had rallied ahead of the reports and Thursday, and that will lead to some end-of week profit-taking, according to Doane Advisory Service market note.
The market has priced in a tighter global supply forecast and without some fresh supportive news, traders will look to reduce some risk exposure.
The world soybean market is struggling on lackluster Chinese demand, with negative Chinese soy crush margins and waning interest in vegoil imports limiting demand from the world's leading importer of soybeans, AgResource Co. wrote in a note.
Harvest progress in South America is expected to limit demand for U.S. soybeans as well, and despite heavy rains in parts of Brazil slowing harvest, large crops are expected to provide competition for U.S. soy exports.
Meanwhile, weather will also play a key role in price direction as a prolonged wet, cold start to spring could shift some corn acres to soybeans, particularly since corn planted on the same land in successive years produced lower-than-expected yields in 2010.
However, losses are seen limited, as soybeans will be forced to follow corn in an effort to not lose to much new crop seeded acres to corn, AgResource added
Soybean's bullish fundamental outlooks remain intact, as smaller 2011 acreage for soybeans means soybeans can't afford to loose a bushel an acre in yield. Small production in 2011 could take ending stocks estimates down below 100 million bushels for the 2011-12 marketing year, analysts said.
Nearby soybean prices still have the greatest potential for a short-term spike, as U.S. Department of Agriculture's lower March 1 stocks figure revealed the market failed to ration demand in the Dec-Feb quarter.
The market has a task of rationing usage of already precariously tight projected end of year supplies, a feature put back on the table after USDA projected 2nd quarter stocks at 1.25 billion bushels were below the low end of industry expectations.
Soybean futures are also expected to rally to make prices attractive enough to encourage South American plantings next crop year. However, plantings for next year's South American crop are a long way off, and this will keep a very cautious view on U.S. weather conditions this year.