July soybeans were trading 11 3/4 cents higher near 7:30 cst. China futures closed 0.2% lower overnight while Malaysia palm oil prices were down 1.6%. The Nikkei was lower overnight in the wake of big losses on Wall Street yesterday, which in turn were the result of the Moody's downgrade. While Shanghai was closed, the Hang Seng and other Asian equity market measures were uniformly weaker off the US Thursday developments and they were also weaker because of renewed European slowing fears. European equities were weaker this morning, with investors concerned about a softer than expected German IFO reading, but the markets might have seen some support from an E4 meeting. The US scheduled report slate is mostly empty today, with the exception of a weekly 3rd or 4th tier economic activity index from the Economic Cycle Research Institute. Surprisingly, the US equity markets were showing early positive action in the wake of the very hard day down yesterday and that probably serves to temper deflationary/slowing vibes that were clearly in place at times on Thursday. The market saw a combination of cooler weather with some light rain chances for the next few weeks along with the bearish outside market forces drive soybeans down sharply off of the highs this week. Crop conditions, however, could continue to deteriorate for Monday afternoon's weekly update (down another 2-4%) and traders see the need for a shift in the drier than normal pattern for the Eastern Corn Belt for hope of avoiding lower than trendline yield this season. A bearish tilt to gold, the dollar and energy markets plus more rain concerns helped to spark a sharp break in November soybeans as well for yesterday's action. Weekly export sales hit a marketing year low for the old crop season and fund traders were aggressive sellers. Meal and oil sales were stronger than expected. The forecast still calls for mostly drier than normal weather for the next few weeks with some scattered rains emerging for late next week and into early July. The overnight models were a bit warmer in the 6-15 day models. Cash basis was a bit weaker at the gulf yesterday but firm for interior locations and higher for Iowa processors. Topsoil conditions as of June 17th were short to very short for 85% of the state of Indiana, 77% Ohio and 82% Missouri. As South America basis improves with the tightening available supply for export, the US could see improving demand for soybean and meal exports in the weeks just ahead. August soybeans are gaining on November the past few sessions and August meal on December meal. Talk of possible switching of cargoes from Brazil to the US has helped to provide underlying support. Without a shift in the weather pattern, traders are growing more and more nervous over declining yield potential for the eastern Corn Belt.