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Traders eye USDA Reports

11/05/2012 @ 10:02am

U.S. soybean futures are lower Monday, as traders curb risk amid uncertainty ahead of Friday's crop forecasts from the Department of Agriculture.

Chicago Board of Trade soybeans for November delivery were recently down 9 cents, or 0.6%, to $15.18 a bushel. Soybeans for January delivery were down 9 3/4 cents, or 0.6%, at $15.17.

Soybean traders are bracing for a potential increase in government estimates for U.S. supplies after private forecasters raised projections last week.

Traders are anticipating higher yields for this fall's U.S. soybean crop when the USDA publishes its crop estimates Friday, said Jason Britt, president of brokerage Central States Commodities in Kansas City, Mo. However, higher consumption, especially from foreign importers, will offset any increase in production and should keep futures prices choppy, he said.

Export sales of U.S. soybeans are running 39% higher than at this stage a year ago. And they have reached 75% of the total sales expected for the 2012-13 crop marketing year that began Sept. 1.

Soybean futures are pressured by improving weather for planting that is underway in Brazil and Argentina, the world's two largest producers after the U.S.

Still, Mr. Britt said, soybean futures likely won't fall much further from current levels because global supplies of the oilseed will be tight until farmers in South America harvest their crops next spring.

Demand for U.S. soybeans has remained relatively strong in the face of tight supplies, as export customers have continued to buy the oilseed and domestic soybean-processing margins have been strong.

Soybean buyers such as China, the world's largest soybean importer, are expected to soak up U.S. supplies until the harvests next year in South America.

This past summer's severe U.S. drought has fueled high global grain prices, and international markets are counting on record harvests in Argentina and Brazil to rebuild depleted stockpiles.

Meanwhile, managed funds such as hedge funds increased their net long position in CBOT soybeans slightly, to 174,194 contracts, an increase of 1% from the prior week, according to data Friday from the U.S. Commodity Futures Trading Commission.

On tap for Monday, the USDA is scheduled to release its weekly export inspections report at 11 a.m. EST and its weekly crop-progress report at 4 p.m. EST.

--Write to Andrew Johnson Jr. at andrew.johnsonjr@dowjones.com.

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