U.S. soybean futures are poised for a lower start to Thursday's day session, as traders reduce risk exposure amid political unrest in the Middle East and North Africa.
In overnight trading, Chicago Board of Trade March soybean futures were 9 cents lower at $13.11 a bushel and May soybeans--the most active contract--was down 9 1/4 cents at $13.22 1/4. New crop November futures were down 10 1/2 cents at $12.85 1/4. Analysts expect soybeans to open 8-10 cents lower.
"Political unrest in the Middle East, including Libya and Egypt, continues to overhang the markets as traders fear the turmoil will turn into a slowing global economy," Midwest Market Solutions president Brian Hoops wrote in a market note.
Investors are exiting grain and oilseed futures positions in favor of energy and financial markets due to anxiety over the political unrest.
"Speculative funds see more bullish opportunities in crude oil and metals and are reallocating assets," said Dan Basse, president AgResource Co., a Chicago-based agricultural consultancy.
CME Group reported open positions in CBOT soybean futures declined by 10,840 contracts Wednesday.
Soybeans are also 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.
However, the tightness of 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.
U.S. 2011-12 soybean production is seen at 3.345 billion bushels, with planted area estimated at 78 million acres, U.S. Department of Agriculture Chief Economist Joe Glauber said Thursday.
In its Feb. 14 baseline report, the USDA estimated 2011-12 planted area at 78.0 million acres. It had estimated production at 3.355 billion bushels with a yield of 43.5 bushels per acre.
"USDA this morning stuck to its forecast for farmers to plant 78 million acres this spring, mostly in line with trade expectations," said Farm Futures analyst Bryce Knorr in a market note.
Meanwhile, U.S. Census Bureau reported soybeans crushed in January totaled 149.2 million bushels, below the average of trade estimates at 151.8 million. Soyoil and soymeal stocks were below the average trade guesses due to the slower crushing pace.