CHICAGO (Dow Jones)-- U.S. soy futures are expected to open higher Friday on hot South American weather and year-end positioning, analysts said.
Traders expect Chicago Board of Trade futures will open 3 to 5 cents higher. In overnight trade, soybeans for January delivery were up 3 3/4 cents to $11.91 1/4 per bushel.
Hot, dry weather in southern Brazil and Argentina is fueling the market, which has retreated slightly the past couple of days but is still up sharply since mid-December.
"South American weather is still the driving force for the complex," brokerage FCStone said in a Friday report to clients.
While parts of southern Brazil are expected to see some rains that will offer relief from the dry weather over the next couple of days, "more is needed," Commodity Weather Group said in a Friday report.
The weather service added that in Argentina "relief will remain spotty over the next 10 days." Temperature in many of Argentina's drier spots will hit 95-to-100 degrees from next Tuesday through the following weekend, it said.
Although the hot weather has been seen as more of a problem for corn because it has an earlier growing season, the drought-like conditions are becoming more of a concern for soybeans as the season progresses, traders said. A smaller South American crop would likely mean increased export demand for the U.S.
Weekly export sales reported Friday were considered solid. The U.S. Department of Agriculture reported weekly net sales of 663,200 metric tons, at the high end of expectations. Traders forecast sales anywhere between 300,000 and 700,000 metric tons.
Friday is first-notice day for the January soybean contract. CME Group reported 352 deliveries against the January contract. Traders were forecasting deliveries between 100 and 400.
Traders said that Friday's trade could be characterized by light volume and positioning squaring to end the year. The market is closed Monday for the New Year's Day holiday.
The potential for changes in South America's weather forecast over those three days should encourage caution, analysts added.
Soybean futures will end the year lower, as the spot month closed 2010 at $13.93 3/4 per bushel.
