The U.S. soybean market was lower overnight on profit taking after yesterday's explosive move higher. November soybeans traded 15 cents lower at 5 am CST while August soybean meal was down $3 and soybean oil down 78 cents. Dalian soybean futures were down slightly overnight and Malaysian palm oil futures eased from a 5 week high on profit taking. Chinese equity markets were mixed again overnight, with Hong Kong shares lower and mainland Chinese shares managing to post a minor gain in the face of another weekly loss. European shares were weaker with the DAX posting a somewhat noted slide. The US scheduled report slate today will present monthly payroll data for June, which is generally expected to show a gain of roughly 100,000 jobs, an improvement on the prior month's gain of only 69,000 jobs. Apparently a series of central bank easing moves this week have failed to improve macroeconomic sentiment around the globe, and without an as expected US Non farm payroll result today, the fear of slowing and deflation are likely to dominate over hope of a return to growth. While a softer than expected US Non farm payroll result will probably enhance the fear of global slowing further, and that type of news could rekindle talk of US easing later in the session, that might not be a result that initially favors physical commodity markets. There were no deliveries posted for July soybeans. There were also no meal deliveries, but oil deliveries were reported at 1,609 contracts to bring the total this month to 11,229. After trading sharply higher on Thursday, the soybean complex relaxed overnight on profit taking ahead of the weekend. November soybeans surged to fresh contract highs at 15.29 following a gap higher open. The overnight trade saw a push towards the highs set the day prior, but bulls were unable to reach above them. Outside markets are providing a mixed to slightly negative tone this morning, with the U.S. Dollar trading slightly higher after it's very strong performance yesterday. Soybeans have rallied nearly 23% since the June 4th period and have posted 4 consecutive new highs following a week that has bought record high heat to some of the largest soybean production regions in the U.S. With the scorching temperatures expected to last into the weekend before cooling down early next week, traders are anticipating another 3-5% decline in crop ratings next Monday. Current weather models suggest slightly better rainfall in the Delta and Southeast next week. Accumulation will most likely not amount to much, but some rain is better than no rain. No drought saving showers are expected in the eastern U.S, southern Midwest, or Delta next week. In fact, the rainfall will likely only stabilize stressed soybean crops, instead of drastically improving their reproductive foundation. Many believe it's important to keep in mind that while a great percentage of the corn crop is past the point of no return, the soybean crop still has a chance to improve. With the potential for an El Nino year developing in late July to early August, the prospects for better rainfall improving soybeans outweighs those of corn. Regardless, when looking at the international demand picture, one has to be impressed with the consistency of the Chinese buyer. Brazilian exports in June were in line with market expectations at 4.8 million tonnes vs. 4.6 million tonnes in June 2011. However, with Brazilian cash soybean prices surging as of late, a strong export pace going forward is unlikely due to the tightening supply situation. This should support the U.S. soybean market long term when China comes to the table. A strong demand foundation, tightening balance sheet, and threatening weather still offers support which should keep the bulls confident from the demand front.
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