CBOT soy outlook: Seen up; crop prospects, stable outside markets

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CHICAGO (Dow Jones)--U.S. soybean futures are poised for a higher start, recovering from Tuesday's declines on stability in world financial markets and prospects for lower yield and production.

CBOT soybeans are called to open up 6 cents to 8 cents.

In overnight trading, Chicago Board of Trade November soybean futures were up 7 1/2 cents at $14.30 a bushel.

"Soybeans should regain some of yesterday's losses on the open today, unencumbered, at least so far, by worries from Wall Street while worsening crop conditions from the mid-South into the eastern Midwest add support," said Farm Futures' Bryce Knorr in a market note.

Soybean crop condition ratings declined as expected in the week ended Sunday, a reflection of stress from hot, dry weather in the central U.S. corn belt.

The government, in a weekly report Tuesday, said 56% of soybeans were good to excellent condition, down one percentage point from the prior week. Analysts expected soybean crop conditions to decline 1-2 percentage points.

Industry analysts are concerned about crop potential, particularly with new-crop soybean end-of-year supplies already forecast at precariously tight levels by government forecasters.

The markets have absorbed a steady dose of private forecasters calling for smaller harvests this fall and slumping ratings provide some validity to the lower crop prospects, analysts say.

Traders continue to digest private crop estimates leading to the next crop forecast from federal forecasters Sept. 12.

Cropcast Ag Services, a division of EarthSat Weather, is the latest firm to lower crop estimates, pegging soy production at 2.924 billion bushels using a yield of 40.3 bushels an acre.

In August, U.S. Department of Agriculture projected soybean output at 3.056 billion bushels, with a yield of 41.4 bushels an acre. The government is slated to update its forecasts Monday.

However, industry analysts are becoming increasingly comfortable with yield estimates near 40 bushels per acre for soybeans, meaning unless yields drop below this in government forecasts, it may be hard to stage any significant rally from current levels.

Otherwise, investors are also cautious of taking on added risk with traders mindful that soybean yields still have room to improve, as late-season rains will help soybean pod filling, analysts say.

The influence of external financial markets will continue to impact prices, with analysts concerned about soybean demand holding up in the face of a sluggish world economy.



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