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November soybeans are trading 13 cents higher near 7:30 am cst. Soybean meal and oil also traded higher overnight. Malaysian Palm Oil futures climbed higher on concern that floods in key growing regions may have impacted output. Chinese stocks were mostly higher again overnight, with Chinese data providing a measure of improved confidence. Chinese GDP of +7.4% and Industrial Output gains of +9.2% apparently inspired some confidence in global economic prospects. However, European shares weren't overly inspired by the action and news from China, as stocks in Europe were mostly tracking sideways, perhaps because EU leaders are gathering for a two day summit to discuss budgeting, a bank supervisory Union and perhaps they will also discuss the creation of a currency commissioner. The markets were also presented with a rise in UK retail sales for September of +0.6% and therefore one could suggest that the outlook for the global economy continued to gradually improve overnight. In the US trade today, the markets will be presented with initial claims, which are expected to rise modestly, but the big question might be whether or not last week's big drop in claims will be readjusted after reports last week that one US state did not submit its weekly figures. The markets will also be presented with a Philly Fed Business survey, which is expected to make a minimal rise and the trade will also see a Leading Indicators Index, which is also expected to produce a minor improvement.
The more positive technical action, continued strong demand from China and tight producer holding of the fresh harvest are seen as positive short-term forces. November soybeans held steady in a low volume day yesterday but bids began to show up in the final hour of trade that push the spot contract up to new daily highs and settled near the highs of the day. The positive close, along with optimism over today's exports sale number is adding to the supportive momentum this morning. Yesterday's volume was pegged at 133,345 contracts and open interest decreased by 1,142 contracts.
Soybean basis was mostly flat yesterday but rumors circulated that China was inquiring about soybean cargos which kept bids under the market. Additional support is coming from a firm basis in Brazil where export premiums have rose by nearly 40 cents per bushel over the last couple of weeks. Thoughts that Brazil is out of soybeans to sell for this crop year helped to support. Processor bids were steady on the day as harvest continues with Decatur, IL paying 15 cents over the November contract and Des Moines, IA bumped bids by a penny to 23 under the November contract. Cash markets have a positive outlook as exporters and crushers will begin the difficult task of sourcing bushels to keep supply pipelines healthy. Farmer's sales are slow with many bringing soybeans back home in anticipation of much high cash prices.
Traders are expecting another explosive export sales report this morning with many in the traded suggesting sales could be near 800,000 tonnes. Last week's sales were reported at 523,000 tonnes but the report coincided with a week-long Chinese holiday, which may have limited activity by buyers. Weather in South American remains favorable with showers expected this week in Brazil while Argentina dries out. Some estimate that Brazil soybeans are just over 20% planted which is about 5% slower than last year. Argentina farmers are beginning to wrap up corn planting and soybean planting activity should pick up this week and throughout the remainder of October.
*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.