November soybeans are trading 13 cents higher near 7:00 am cst. Soybean meal and oil are both trading higher this morning. There were no October soybean meal deliveries bringing the month to date total to 10. There were 226 soybean oil deliveries which brought the month to date total to 14,889. Malaysian Palm Oil futures traded to their highest level in more than a week after the Malaysian government approved a cut to the crude palm oil export tax to help offset record domestic stocks. Chinese stocks were mixed again overnight, as Hong Kong shares managed to rise while Shanghai and Shenzhen shares were lower perhaps because of overnight comments from the Fed's Yellen that suggested Asian momentum had slowed recently. European stocks might have been knocked off balance by the S&P downgrade of Spain but some markets have spun that development into a positive as statements from the S&P credit suggested that seeing Spain wait to request an official bailout was partly behind the rating cut. US equity markets were higher early on as investors saw some favorable earnings results in Europe and there was some residual positive spin seen from yesterday's Fed Beige book release. Today the markets will be presented with a weekly claims reading that might take on added importance because of the looming election and also because of the surprising decline in the US unemployment rate last Friday. Also due out today are US Trade numbers, a flurry of speeches from the Fed around mid-session and a 30 Year bond auction in the early afternoon.
For the report this morning, the main focus of the market will be on what revisions are made to the US average soybean yield, production, and if there will be any increases to demand. The trade is expecting a US average soybean yield near 37 bushels per acre vs. the September estimate of 35.3. Production is expected to rise to near 2.75 billion bushels vs. 2.63 in September. The likelihood of an increase in the US soybean yield for the report is well known at this point. Some believe an increase of 1.5-2 bushels per acre is already priced. Many in the market also believe that any increase in the average soybean yield and production will be offset slightly by increases in demand. A production estimate near 2.75 billion bushels and an increase in demand of 150 million bushels would still imply 2012/13 ending stocks at 130 million bushels and a stocks/usage ratio of 4.6%. The trade is expecting a slight increase to the US carryout to just over 130 million bushels vs. the September estimate of 115 million bushes.
Despite the expected increase in the US average soybean yield, demand remains explosive with consistent export sales to China. Private exporters sold 120,000 tonnes of US soybeans to China yesterday for 2012/13 delivery. China continues to auction off 400,000 tonnes of state reserves on a weekly basis in an attempt to stabilize domestic inflation. Thursday's scheduled auction drew a lukewarm response with only 225,355 tonnes sold after the government increased prices by nearly 15%. In addition, rumors that crush margins have turned positive in China is supportive to Chinese soybean demand in the short term.
Basis bids in the US Midwest were weaker for some interior areas of the US. Reports show that bids in Cedar Rapids, IA fell by 10 cents per bushel to 50 cents under the November contract as harvest advanced. Pressure was also seen in Indiana where bids fell by 7 cents per bushel near Decatur, IN. Decatur, IL bids were steady at 12 cents over the November contract.
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