November soybeans are trading 3 cents higher near 7:30 am cst. Soybean meal is trading higher while oil is off session highs and trending lower in early trade. Malaysian Palm Oil futures rose overnight as traders grew optimistic on strong palm oil exports for the first part of this month and on strong US oilseed markets. Hong Kong stocks clawed for their 7th straight higher close overnight but mainland Chinese shares were a touch weaker but they did finish the week with a gain. European shares were weaker reportedly because of disappointing earnings from US tech sector giant Google. Apparently the 2 day EU meeting failed to yield much in the way of optimism and it also seemed that news of a Euro zone trade surplus also failed to inspire confidence in investors at the end of a choppy week of trade. The focus of the US trade will turn to US existing home sales readings, which are generally expected to contract. However, a long string of favorable US housing data recently might make the weak data today a little less deflating.

A stronger technical outlook mixed with surging demand influences, as harvest comes to a close, has kept solid buying support in the soybean complex overnight. Early weakness was seen in the soybean market after Asian markets opened up lower but losses were erased after corn and wheat caught a bid following reports that Ukraine was intent on banning wheat exports by November 15th. The early losses were attributed to profit taking following sharp gains yesterday. Traded volume was recorded at 236,044 contracts and open interest increased by 3,807.

Soybean basis remains strong across the US Midwest and in the Gulf of Mexico despite the sharp rise in futures. Decatur, IL bids were steady at 15 cents over the November contract and bids jumped by 3 cents per bushel to 20 under the November contract in Des Moines, Iowa. Major South American exporters are reportedly sold out of soybeans until their harvest begins late in the first quarter of 2013 and China continues to inquire about cargos between November and January. Cumulative US exports for this crop year are already 71% of the current USDA estimate of 1.265 billion bushels vs. the 5 year average of 47%. There were no soybean trades at the Rosario Grain Exchange for the 4th straight day as exporters showed no interest in buying after new government export policies slowed vessel traffic in the port. Indian soybean futures rose by 2% on good export demand for soybean meal and on weaker currency trade.

A surge in soybean meal premiums are also adding to the supportive tilt on reports that suggest buyers are switching from South America to US origin product. Premiums in the Gulf of Mexico have hit levels not seen since 2009 and the cumulative soybean meal export pace is now 20% over the 5 year average. Scattered showers this week in areas of Brazil are beneficial to early planted soybeans. The 11-15 day forecast calls for a return to drier conditions for central and northern Brazil but scattered showers may still offer a bit of relief. South Brazil and Argentina are trending wetter. Overall, more rain is needed in central and northern Brazil while a good period of dry weather is needed in Argentina.

 

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