CBOT Soy Outlook: Seen Slightly Higher, Eyeing Argentina

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CHICAGO (Dow Jones)--U.S. soybean futures were expected to start steady to slightly higher Thursday as traders assess the risk for crop losses due to poor weather in Argentina.

In overnight electronic trading, soybeans for January delivery, the nearby contract, rose 1 cent, or 0.7%, to $13.67 a bushel at the Chicago Board of Trade. Soybeans for March delivery, the most-active contract, edged up 1 cent, or 0.7%, to $13.78.

Traders remain worried about damage to Argentina's crop as forecasts call for stressful heat and dryness to persist for another five days. Widely scattered showers may bring temporary relief to fields Tuesday but are not expected to signal a shift to a wetter pattern, according to private weather firm Telvent DTN.

Rainfall next week "will not greatly improve" Argentina's soil moisture but will slow declining crop conditions, said Kim Rugel, analyst for Benson Quinn Commodities. Traders are paying close attention to the condition of the crop because Argentina is the world's third largest exporter of soybeans and leading exporter of soy products.

The forecast for rain could weigh on prices due to the perception that rains may continue once it starts, an analyst said. However, market participants are nervous about tightening world soybean supplies due to strong global demand, particularly from China.

"The threat of weather problems reoccurring next week is going to keep any significant selling off the market," said John Kleist, broker and analyst at Allendale, an Illinois-based brokerage firm.

Still, market participants could take profits ahead of the end of the year following recent rallies to 28-month highs, analysts said. The neighboring corn and wheat markets, which also have reached two-year highs this week, are expected to start lower on profit-taking Thursday.

The soy market also could feel some pressure from unimpressive export sales data, an analyst said. Weekly U.S. soybean export sales of 948,200 tons were toward the low end of analysts' estimates, which ranged from 900,000 to 1.3 million tons. Net sales of 663,200 tons for delivery in the 2010-11 marketing year, which runs through Aug. 31, were down 20% from the previous week and 8% from the prior four-week average.

Weekly soyoil export sales of 3,100 tons were below estimates of 20,000 to 50,000 tons. Weekly soymeal export sales of 219,000 tons were toward the high end of analysts' estimates, which ranged from 175,000 tons to 225,000 tons.

-By Tom Polansek, Dow Jones Newswires; 312-341-5780; tom.polansek@dowjones.com



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