November soybeans are trading 22 cents lower near 7:30 am cst. Soybean meal and oil traded weaker overnight as well. Malaysian Palm Oil futures fell near a 3 year low overnight on rising stockpiles, a weak US soybean market, and concern over sluggish exports out of Malaysia. The Nikkei forged another downside breakout overnight on the charts and that weakness might have been truncated by an interest rate cut by the Royal Bank of Australia. Chinese stock markets were closed due to holiday. European stocks opened weaker, but managed to claw back into positive ground, perhaps because of the RBA rate cut. It is also possible that Spanish and European stocks were lifted slightly because of increased expectations of an upcoming bailout request from Spain. However, European investors are still on edge after recent PMI readings confirmed an ongoing pattern of slowing in the Euro zone into the end of the year. The US stock market has started out on a positive note, from carry over beginning of quarter allocations and perhaps because of the easing move from Australia and the hints from the RBA of even more easing if it is necessary. Today the US will see private chain store sales figures, a private jobs report and New York ISM numbers and that data should increase the attention on the state of the US jobs sector into the Friday monthly payroll release.

The soybean market continues to fall below key support levels as fund liquidation continues but only minor changes were made to open interest. Volume was recorded at 182,014 contracts and open interest actually rose by 845. The failure of the soybean market to show dramatic reductions in OI on steep sell offs continues to suggest that commercials and end users have been active buyers. This could result in bullish price action over the long term.

The weekly Soybean Conditions report showed 35% of the soybean was rated good/excellent compared to 35% last week and 54% last year. The 10 year average for this time of year is 56%. This is the lowest good/excellent rating since 39% in 2003. Poor/very poor ratings fell by 1% to 33%. Reports of better than expected soybeans yields continue to circulate around the market which is adding to the bearish tone. Many traders fell the USDA could increase the average US soybean yield on the October 11th Supply and Demand report with current yield estimates at 35.3 bushels per acre.

The weekly Soybean Harvest report showed 41% complete compared to 22% last week and 15% last year. The 10 year average for this time of year is 22%. This is the highest percent completed on record. Harvest weather looks favorable for the central and northern Corn Belt this week and light showers in the southern Midwest could result in minor delays. Disruptions are expected to be minimal and the soybean harvest will be over half way complete by next Monday.

A private crop analyst in South America raised their Brazilian soybean production estimate for this year to 79.08 million tonnes vs. prior estimates of 78.1 and current USDA estimates pegs the crop at 81 million tonnes. It was reported that Brazil shipped 1.68 million tonnes of soybeans for export in September vs. 2.43 in August. Many in the trade believe Brazil is completely out of soybeans to sell for export going forward until their harvest is underway late in the 1st quarter of 2013. The slow pace of exports has done little to support the short term trade but this could be a bullish factor if China continues to buy US soybeans once they come back from holiday next week.

Additional pressure in the soybean market is coming from dramatic drops in basis across the US Corn Belt. Bids in Decatur, IL fell by 15 cents per bushel to 10 over the November contract and bids in Lafayette, IN dropped by 20 cents per bushel to 10 cents under the November contract. The softer tone to the market is likely a result of increased farmer deliveries on existing contracts. New farmer sales are slow given current cash prices.

 

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