July soybeans were trading 11 cents higher near 7:30 cst. China futures closed 0.4% higher overnight while Malaysia palm oil prices were up 1.3%. Chinese stocks were stronger overnight, as the markets were at least initially cheered by news of a pro-bailout party victory in Greece. European equities were also positive with the DAX and CAC 40 higher but the IBEX was lower and at least a portion of the early moderate gains in the European markets were being pared. Early US equity market action was weaker as the trend of the overnight action was seemingly shifting back in favor of the risk-off crowd. Markets might have been discouraged by the lack of an Indian interest rate reduction overnight and they might also have been disappointed with Spanish yields reaching up to a Euro era high as that could keep many potential investors on the sidelines until the road forward is less bumpy. It is possible that an upcoming G20 meeting will serve to cushion the markets against the Euro zone debt contagion story, but in the meantime the markets are likely to be driven in both directions as the world waits to see if the Greeks can actually form a government with the newly elected factions. The next 10 days look hotter and drier in the Midwest than traders expected late last week. In addition, some areas of northern Illinois and into Indiana received much more rain on the weekend than anticipated. However, traders see near 1/3rd of the Corn Belt needing more rain as we enter a hot period ahead. Tom Skilling in Chicago has 97 degree highs for the next three days and then a return to high temperatures by Sunday, back to 95 degrees. Without rains in between, crop stress could be significant. Traders see another 1-2% drop in crop conditions for tonight's report even though many areas received some rains last week. Traders see less macro economic concerns after the weekend elections but stock market and energy market reactions so far have not been too supportive. July soybeans pushed lower on Friday and down to the lowest level since June sixth. Private exporters reported the following three transactions. China bought 262,000 tonnes of US soybeans for 2012/13 season. Unknown destination bought 120,000 tonnes of US soybeans for the 2011/12 season and China cancelled 147,000 tonnes of soybeans for the 2011/12 season. A prominent research firm revised their soybean planted acreage estimate up to 76 million acres as compared with 73.9 million by the USDA. Traders have been expecting a 1.5-2.0 million acre increase so the news was seen as a negative factor. An extra 2.1 million acres could add near 92 million bushels to production. The Commitments of Traders reports as of June 12th showed Non-Commercial traders were net long 212,136 contracts, an increase of 35,167 contracts for the week and the buying trend is a short-term positive force. Non-Commercial and Nonreportable combined traders held a net long of 188,315 contracts, up 41,039. For Soybean Meal, Non-Commercial traders were net long 80,813 contracts, an increase of 6,824 for the week. Non-Commercial and Nonreportable combined traders held a net long of 102,898 contracts, up 10,887 for the week. For Soybean Oil, Non-Commercial traders were net short 39,611 contracts, up 2,390 contracts for the week and the selling trend is seen as negative. Non-Commercial and Nonreportable combined traders held a record net short position of 44,393 contracts, up 1,368 for the week. Trend-following fund traders (non-commercial less index funds) held a record net short position of 56,009 contracts which leaves the market oversold.
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