November soybeans were up 9 3/4 cents late in the overnight session. Malaysian palm futures closed 1.5% higher, and China soybean futures closed up 0.5%. Equity markets in Asia and Euro were generally higher overnight, and early indications are that US equity markets will open with substantial gains. The US Dollar was weaker against most of the major currencies this morning. While rebel forces have control of most areas in the Libyan capital of Tripoli, fighting continues between loyalist and opposition forces. A private survey of Chinese manufacturing during August was 49.3, higher than market expectations. A private survey of Euro zone manufacturing during August was 49.7, in-line with forecasts. And a private survey of German economic sentiment during August was -37.6, much weaker than expectations. The first leg of the Treasury refunding, the 2-year Note auction, will have results announced at 12:00 PM. Major US economic numbers to be released this morning are July New Home Sales, the Richmond Fed Manufacturing Survey at 9:00 AM, and a private survey of store sales released during the session. Gold is weaker and crude oil higher, so outside forces look supportive this morning. Along with the positive tilt to outside markets, news of deteriorating crop conditions helped to support the market overnight. Limiting the upside may have been the rain system moving across southern Minnesota and northern Iowa, which is bringing badly needed rains to the area. The weekly Crop Progress Report showed that 59% of the soybean crop was rated good/excellent as of Sunday, compared to 61% last week and 64% last year. The 10 year average for this time of year is 57%. Conditions improved in Ohio, but Illinois and Iowa slipped 4% to 53% and 66% respectively, and Minnesota fell 5% to 68% good to excellent. Dryness concerns persist for parts of Iowa, central Illinois and west-central Indiana. Traders believe that if dryness persists for another few weeks in these areas, the crop will run out of time to recover yield potential. If we assume a drop in yield from the last USDA estimate of 41.4 to 41.0 bushels per acre and also assume a loss of 200,000 acres from flooding issues, our estimate of ending stocks would slip to 118 million bushels with a stocks/usage of just 3.7%, the lowest on record (since at least 1964). The market saw improvement in outside market forces and disappointing rains for the weekend for central Illinois, and this helped drive futures sharply higher yesterday, with November soybeans up to the highest level since July 27th (and July 22nd overnight). Traders will be monitoring comments from an annual crop tour across the Midwest this week for clues on yield. Weekly export inspections, released during the session yestgerday, came in at 10.85 million bushels, which was higher than expected.
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