November soybeans were down 4 cents late in the overnight session. China futures were up 0.1% overnight. This was the third day in a row of higher trade and it pushed futures to an 8-month high. Soyoil was up 0.8%. Traders were looking for 0-100 contracts for first notice day deliveries for soybeans this morning, and deliveries came in at 44 contracts. Oil deliveries were 2,796 vs. expectations for 2,000-5,000 contracts, and meal deliveries came in at 193 contracts versus expectations for 0-200 contracts. Equity markets in both Asia and Europe were stronger overnight, and early indications are that US equity markets will open with substantial gains. The US Dollar was near unchanged against most of the major currencies. The German cabinet approved expanding the powers of the Euro zone's emergency bailout fund. The Chinese Premier stated that fighting inflation is still a top priority of his nation's economic policy. UK Consumer Confidence during August came in better than expectations. Japanese Industrial Production during July was up 0.6%, lower than forecasts. Japanese Housing Starts during July were up 21.2% year-on-year, much higher than projections. German Retail Sales during July were unchanged, better than expected. German Unemployment during August was 7.0%, in-line with forecasts. Euro zone CPI during August was up 2.5% year-on-year, in line with forecasts. Euro zone Unemployment during July was 10.0%, slightly higher than expected. Major US economic numbers to be released this morning include a private survey of National Corporate Employment at 7:15 AM, July Factory Orders as well a private survey of Business Sentiment in the Chicago Area at 9:00 AM, and a private survey of mortgage applications released before the session. In addition, Fed Regional President Lockhart will give a speech during the session. After a 74 1/2 cent run higher in just 4 trading sessions and a run of as much as $1.76 1/2 in just 16 trading sessions, many traders see the market in a short-term overbought condition. The rally is raising demand concerns as September 1st supply out of South America is thought to be near a record high. Supply concerns persist as a lack of rain for central Illinois and a relatively dry trend for the next ten days for most growing areas except parts of Nebraska, Iowa and Wisconsin has traders looking for further deterioration in crops. Some rain is expected (1/2 inch or less) into the weekend for much of the Midwest but areas which miss out may remain under considerable stress. Talk of a sub-40 yield for the US has sparked aggressive buying from speculators and fund traders. Open interest is up near 80,000 contracts in the past few weeks. China imported 5.35 million tonnes of soybeans in July, up 24.4% from June while vegetable oil imports were 700,000 tonnes, up 48.9% from June. Traders see a sluggish demand pace from China for soybeans this month as the country may release another large quantity of state reserve soybeans ahead of their harvest. Port stocks for soybeans last week were estimated near 7.28 million tonnes which is down from 7.68 million tonnes from the end of July but still up from normal levels of near 3-4 million tonnes. November soybeans closed moderately higher on the session yesterday and has posted new contract highs for three sessions in a row. Another drop in crop conditions and a lack of significant moisture in the forecast for central Illinois helped support. Traders are concerned with lower yield potential in the US and in China. China production was already expected to be down near 11% from last year due to lower planted area so yield issues could push production even lower. The market found some support from lower temperatures in the extended forecast models for later next week but it does not appear that temperatures will get much below the low 40's in the far northern growing areas. Taiwan bought 60,000 tonnes of soybeans from Brazil. In a survey of nearly 1,000 farmers, Farm Futures magazine indicated that soybean planted area in 2012 could reach 76.9 million acres, up 2.3% from this year. Basis levels are down sharply for nearby shipment this week due to the advancing harvest and the surge in futures.
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