January Soybeans are trading a quarter cent higher near 7:30 am cst. January meal is modestly lower while oil trades in positive territory. Malaysian Palm Oil futures rose to a 1-month high after it was reported that October 1-25 exports jumped 11% from a month ago and on short covering ahead of a holiday weekend in areas of Asia. Hong Kong stocks continued to outperform Shanghai and Shenzhen markets, with the Hang Seng index forging the highest close in roughly 14 months. European stocks were reportedly lifted because of upbeat Chinese Factory output forecasts. US equities started out on a mostly positive track today perhaps because of expectations of generally positive scheduled data flows later in the trading session. Expectations call for a fairly robust increase in US durable goods, a noted decline in initial claims and a jump in pending home sales results. Also due out today, are a Chicago Fed National Activity Index and a couple of private consumer and business surveys.
Strong cash markets, robust demand, and a more favorable technical outlook continue to support the bull camp this morning following sharp gains yesterday. January soybeans surged to highs not seen since October 1st and volume was substantial on the move higher with 225,461 contracts trading. Surprisingly, open interest only jumped by 690 contracts which offers a mixed bias in the short term. Meal OI increased by 3,022 and oil increased by 2,849. Both of which suggest a positive short term bias.
Soybean basis was mixed yesterday with bids on the river and in the Gulf of Mexico firm on better export demand and surging barge freight costs. October barges were bid 84 cents over the November contract, which is up 5 from earlier this week and November barges traded at 87 over. Processor markets were steady with bids in Decatur, IL unchanged at 18 over and Sioux City, IA bids jumped by 5 cents per bushel to option prices the November contract. Some cash traders suggest that the Argentina government continues to disrupt or discourage an efficient shipment pace due to new customs and tax programs on outgoing cargos. This could shift business back to the US border which is a short term positive. The USDA announced that US exporters sold 105,000 tonnes to an unknown destination yesterday but the trade believes this is business to China. This morning's export sales is expected to be impressive again with many in the trade hoping for a number near 800,000 tonnes of soybeans and 250,000 tonnes of soybean meal. Sales last week were reported at 523,400 and 143,500 respectively.
Weather conditions in South America are beginning to concern the market with rising temperatures in central Brazil this week and northern Brazil remains too dry. Argentina should dry down the rest of this week which is needed but rainfall is expected to return next week, adding further delays to planting. The delays in planting may not affect yield potential but it could push back the start of their export program, which in effect shifts more demand to the US. Some weather forecasters show better rainfall for north Brazil in the 6-15 day outlook.
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