January Soybeans were 19 1/2 cents higher near 7:00 am cst. January meal pushed to the highest level since October 1st and oil was higher. There were 571 deliveries issued overnight for the November contract which pushed the total for the month to 1,071 contracts. Malaysian Palm Oil futures jumped 1.6% overnight finding support from positive China economic news. Chinese shares were higher in the wake of talk that property curbs might be restrained but sentiment was also improved in the wake of an uptick in Chinese PMI data. European equity markets were also showing some initial gains in the wake of some favorable earnings news, but residual evidence of slowing in Europe kept upside traction limited. US equities have started out on a weaker footing, off concerns that the storm is going to cut into feeble US growth rates. The focus of the markets will probably shift back to US employment figures, as a couple private jobs reports are due out this morning from ADP and Challenger. The US economic report slate is also very active today and therefore the condition of the US economy is likely to impact a number of physical commodity markets today.
A strengthening cash market tone, better than expected economic news from China and a positive tilt to outside market forces are seen as supportive factors today. Harvest is winding down and producer selling is still slow which might support the market. Many traders continue to see higher yield and production for next week's USDA update but the need for commercials to pull soybeans away from producers due to front-loaded demand this season has helped to support. The weekly update showed that 87% of the crop is harvested compared to 80% last week and 85% last year. The 10 year average for this time of year is 82%. Eggs set/chicks placed data recovered from the poor numbers of last week and last week's numbers were revised a bit higher. Chick placements were up 2% from last year which is a positive force for meal demand into the first quarter.
The USDA attache in China sees production coming in near 10-12.5 million tonnes which is down from the USDA estimate in last months supply/demand report of 12.6 million tonnes and this compares with last years production of 13.5 million tonnes. Talk of renewed demand for US soybeans from China helped support solid gains yesterday. US exporters reportedly sold 25,000 tonnes of US soybean oil to China for 2012/13 delivery yesterday. South Korea bought 30,000 tonnes of meal from India overnight.
Basis in the Gulf of Mexico was steady to 1 cent higher yesterday and heavy rainfall in Southern Brazil and Argentina have some analysts suggesting that delays to corn planting could shift more acreage to soybeans while others claim the rain is so severe that soybean acreage losses could already be factored in. The Rosario Grain Exchange estimates that farmers are expected to plant 19.5 million hectares of soybeans this season which is up 3.7% from last season. A report from a South American analyst stated that Argentina could lose up to 10% of their overall soybean production due to the violent storms. A substantial cut in South American soybean production could be a supportive factor long term.
South America weather is threatening this week with hot and dry conditions for the central and northern growing areas and too much rain for the southern regions. Weather looks bearish into early next week as drier areas receive rain and wet areas in the south see some relief. Some traders see the 5-6 day period of dry weather in the south as not enough time to get much planting progress complete before another round of heavy rain moves in.
*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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