U.S. soybean futures are expected to start firmer Monday as market participants fear farmers won't plant enough this spring to replenish supplies.
Traders and analysts predict soybeans for May delivery, the most-actively traded contract, will open 4 cents to 6 cents a bushel higher at the Chicago Board of Trade. In overnight electronic trading, the contract rose 6 cents, or 0.4%, to $13.68 1/2 a bushel.
Users of soybeans are nervous about supplies due to uncertainty about how many acres will be devoted to the oilseed this spring. Soybeans are expected to lose out on acres to corn as the grain looks more profitable to farmers.
An estimate issued Friday by private analytical firm Informa Economics for soybean plantings of 75.3 million acres was 3.5% below a recent government estimate and leaves "U.S. soy carryout intolerably tight," according to brokerage firm FCStone. Carryout, or supplies left over at the end of the crop's marketing year on Aug. 31, is projected to be down 7% from last year at the second lowest level in the past seven years.
Traders will "endorse" lower-than-expected acreage estimates, such as those issued by Informa, until the U.S. Department of Agriculture updates its planting projections March 31, FCStone said in a note. The firm warned clients that private estimates can deviate significantly from the government's projections.
Soybean users are uncertain about global supplies as recent rains have raised concerns about the size and quality of the crop being harvested in Brazil, the world's second largest export of the oilseed behind the U.S. Episodes of scattered thunderstorms may cause continued delays to the harvest in the north, while conditions look mostly favorable in southern areas, according to Telvent DTN, a private weather firm.
Farmers could end up planting more acres with soybeans in the U.S. if forecasts for wet weather play out as expected. The National Oceanic Atmospheric Administration's National Weather Service said last week that nearly half the country was at an elevated risk for flooding over the next few weeks due to melting snow.
Flooding is likely to delay or disrupt spring planting, which leads to larger soybean plantings, as the oilseed is sown later in the year than corn and spring wheat, according to Morgan Stanley. Flood-related planting delays will likely have little ultimate effect on yields, but "they could temper much needed corn acreage this spring," the firm said.
"We see the risk of flooding as comparatively bullish corn and wheat over soybeans, as a late planting usually benefits soybean acreage," according to the firm.
In other news, strength in crude oil futures should add strength to prices, as biodiesel is made from soybean oil, traders said. Weakness in the U.S. dollar adds support because it makes U.S. soybeans more attractive to foreign buyers, they said.