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November soybeans are trading 11 1/2 cents lower near 7:30 am cst and soybean meal and oil are weaker as well. There were no October soybean meal deliveries bringing the month to date total to 10. There were 1,031 soybean oil deliveries which brought the month to date total to 13,293. Malaysian Palm Oil futures were down 2% overnight as traders eye rising domestic supplies. The Malaysian Palm Oil Board will release a stocks report Wednesday and some believe stocks could be near a record high. Hong Kong and mainland Chinese shares were lower overnight off revived slowing fears and negative leadership from China Mobile. European equity markets were also weakened off slackening Asian growth expectations from the World Bank. US equities were weaker start as the trade seemed to be faced with a risk off day ahead. The markets might be a little put off by the fact that US Consumer credit readings on Friday afternoon showed a rather large build, as that could suggest to some, that growth in the US is being facilitated by the unsustainable use of credit. The US economic report slate is empty today, because of a partial holiday and that could allow the partial risk-off vibe to remain in place.
The soybean market traded in heavy volume last Friday with 253,451 contracts changing hands and open interest increased by 4,568 contracts. November soybeans ended the day unchanged which carried over a mixed to slightly bearish tone to the start of the Sunday night session. A brief period of support hit the market as Chinese markets returned from holiday overnight but the strength deteriorated as outside markets slid lower.
The Commitments of Traders reports as of October 2nd showed Non-Commercial traders were net long 199,072 contracts, a decrease of 15,144 contracts for the week. Non-Commercial and Non-Reportable combined traders held a net long of 185,250 contracts, down 16,063 contracts for the week and the selling trend is seen as a short-term bearish force. Soybean positions for trend-following funds (Non-Commercial Net of index funds) were cut by 15,770 contracts to 152,902. In soybean meal, Non-Commercial and Non-Reportable combined traders held a net long of 66,147 contracts, down 5,368 for the week. These same traders hold a net long position of 2,756 contracts in soybean oil which represents a decrease of 28,084 contracts in the net long position. The selling trend is negative. In addition, trend-following funds shifted from a net long to a net short position of 15,770 contracts by selling a net 23,470 contracts for the week.
For the report Thursday morning, the trade is expecting a US average soybean yield near 37 bushels per acre vs. the September estimate of 35.3. Production is expected to rise to near 2.75 billion bushels vs. 2.63 in September. A closely followed analyst released their updated production estimates on Friday and reported a yield near 37.8 bushels per acre and production at 2.86 billion bushels. The likelihood of an increase in the US soybean yield in this Thursday's report is widely accepted by market participants and some in the trade believe the recent slide in prices reflect this adjustment already. This could be bullish for prices if the USDA reports a yield near the market estimates. Yield reports continue to be highly variable but better than expected which is leaving a lot of uncertainty over the final production estimate.
Underlying support continues to come from a steady appetite of US soybeans from China. The USDA reported on Friday that private exporters sold 180,000 tonnes of US Soybeans for 2012/13 delivery. Export demand remains steady and basis was firm on the river and in the Gulf of Mexico on Friday. Soybean bids in Davenport, IA rose by 6 cents per bushel to 26 cents under the November contract and bids in Morris, IL increased by a penny to 5 under the November contract. Bids in Decatur, IL were unchanged at 12 cents over the November contract. The 3-year average basis for central IL is near 15 cents under the November contract. New farmer sales continue to be slow as many await higher prices later this quarter. Harvest progress is expected to be near 60% complete as of Sunday. A slowdown in cash soybean movement in the country along with steady export demand could keep strong support in calendar spreads and the US basis going forward.
*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.