January Soybeans are trading 11 1/4 cents lower near 7:30 am cst. January meal and oil are trading lower as well but off their overnight lows. Malaysian Palm Oil futures were down overnight as traders took profits after hitting a 3 week high. Burdensome stocks continue to weight on palm futures but a positive export outlook in 2013 is helping support. Mainland Chinese shares were mostly lower in the face of weakness in financial, Mining and manufacturing shares. European shares were also weaker because of discouraging earnings news and fears of slowing 3rd quarter growth. US shares were sharply lower to start today because of disappointing revenues and guidance from Caterpillar yesterday. While some US scheduled data points recently have been positive, the market is apparently growing increasingly concerned about a slowing of sales activity into the coming US fiscal cliff.
Weak outside markets along with long position liquidation added pressure to January soybeans overnight but futures have climbed off session lows and are settling inside yesterday's range. News for the selloff was limited but a majority of the weakness is attributed to weaker equity markets along with a stronger US Dollar. Yesterday's volume was recorded at just over 206,000 contracts and open interest declined by 1,644 contracts. Funds were estimated to have bought close to 3,000 contracts in yesterday's trade.
The weekly Soybeans Harvest report showed 80% of this year's harvest was complete compared to 71% last week and 77% last year. The 10 year average for this time of year is 73%. The highest percentage completed was 88% in 2010. The report showed that harvest in North and South Dakota as well as Minnesota was 100% complete. Harvest should be wrapped up in the delta by next week as well as states like Nebraska and Iowa. States in the southern half of the Midwest have the most work to do, specifically Kansas, Missouri, Tennessee, and Kentucky. Basis was steady in the Gulf of Mexico but wide swings were seen in the interior of the US with bids on the river in Morris, IL increasing by 10 3/4 cents to option price the November contract. Sioux City, IA is paying 5 under the November contract which was up 7 cents on the day. Basis in Decatur, IL was steady at 15 cents over the November contract. Soybean meal basis was stronger in the west as soybean bids firmed. Bids for meal in the eastern Corn Belt were steady on the day.
A high pressure ridge is expected to develop in the central west to south central regions of Brazil this week causing temperatures to rise. The pattern should be monitored but many weather watchers suggest the ridge should break down next week and more normal weather should persist into November. South Brazil and Argentina will continue to see heavy rainfall through the next 7-10 days but drier than normal conditions in central and northern Brazil remains a concern. The longer term forecast for South America is more favorable.
Export inspections were explosive for the second week in a row and were reported at 61.4 million bushels for the week ending October 22nd vs. 57.8 the week prior. Only 19 million bushels are needed each week to reach this crop year's USDA estimate. This was the highest export inspections pace since November 25th, 2010. India soybean meal exporters have signed deals for up to 1 million tonnes from October through December to start their new crop season which could help ease tight protein supplies. Offers were being discounted by up to $10-15 per tonne vs. South American and US supplies. The tonnage is expected to ship to Thailand, Indonesia, Japan, and South Korea.
*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.
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