U.S. soybean futures are expected to bounce in early trading Thursday, supported by strong demand and lingering concerns about Brazilian harvest delays.
In overnight trading, Chicago Board of Trade March soybean futures were 2 1/2 cents higher at $13.89 3/4 a bushel. May soybeans, the most active contract, was up 2 1/4 cents at $13.96 3/4. New crop November futures were down 3/4 cent at $13.45. Analysts expect soybeans to open 2-3 cents higher.
Weekly export sales released by the U.S. government are expected to support prices, as the report confirmed strong demand from China, said Don Roose, president of Iowa based brokerage U.S. Commodities.
After the recent break in prices, China is showing renewed interest in securing U.S. soybeans, particularly with rains delaying harvest in Brazil and Argentina port workers staging a strike to secure higher wages, Roose added.
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.
U.S. Department of Agriculture's weekly export sales report released Thursday said total soybean export sales were a net 645,300 metric tons for the week ended Feb. 24, with 361,700 tons for delivery in the 2010-11 marketing year that ends Aug. 31. Analysts had forecast sales between zero and 500,000 tons.
Soymeal sales were a net 149,600 tons. Estimates ranged from 75,000 tons to 150,000 tons. Soyoil commitments were a net 16,000 metric tons. Analysts had forecast sales between 5,000 and 15,000 tons.
Meanwhile, precariously tight projected end of year supplies and the uncertainty of 2011 acreage and weather amid the uphill battle soybeans face to attract spring acres provide fundamental strength to underpin prices as well.
Insufficient increases in acreage will require higher-than normal crop yields come summer, if another year of tight supply is to be avoided.
However, the market remains cautious of the volatility that emerged from geopolitical issues in the Middle East and North Africa, and with crop forecasts for Brazil and Argentina exceeding prior expectations, advances are seen limited.
Otherwise, the markets are essentially marking time awaiting developments on spring weather for new crop plantings while enjoying short term support from solid demand and a weaker U.S. dollar, analysts said.