November soybeans were trading up 25 cents near 7:30 cst this morning. China soybean futures were up 0.9% overnight and Malaysia palm oil futures jumped 1.8%. While Hong Kong shares managed a slight rise today, that market for the week was down sharply. Apparently the markets saw the Chinese growth figures to be as expected and not much worse than expected and that seemed to provide European equity markets with a modest early lift. An item that might point to increased support for the Chinese economy, might have been seen in other data Chinese released overnight, which showed government fiscal spending in June jumping by nearly 18% over year ago levels. An Italian debt auction overnight of 3 Year debt instruments showed a yield decline from the June levels and that news also contributed to a slightly upbeat global vibe this morning. Part of the benefit from the reduced Italian debt yield results overnight was countervailed by a Moody's warning of a potential downgrade of Italian debt ratings, if Italian access to debt markets becomes restricted. However, a surprise jump in UK Construction Output for May seemed to provide the markets with just enough added optimism to shift the markets into a risk-on condition. On the other hand, US PPI figures are likely to contract this morning and the trade is also anticipating a minimal drop in the Michigan Consumer sentiment results. While there will be a Fed speech from Lockhart this afternoon, the markets aren't expecting to see any fresh revelations on Fed policy today. There were no deliveries in soybeans overnight. There were also no meal deliveries but oil deliveries were reported at 180 contracts to bring the total this month to 14,490. The market has seen solid gains overnight as traders fret the impact of another hot and dry heat ridge over the western Corn Belt for next week. Crop conditions are expected to fall again into next week and recent dry soils have left many soybean fields in the Midwest in limbo with a lack of growth. Some insect issues are also beginning to be reported with spider mite reports on the rise. The export pace for soybeans for old and new crop is very strong and the USDA may be forced to increase exports in the next supply/demand update. Bull spreads are working in meal and meal basis is very strong in South America and domestic meal demand is also on the rise as end users scramble for coverage. Corn has been surprisingly strong against the soybean market and the current spread is even encouraging South America producers to consider corn; not soybean expansion this year. November soybeans closed moderately higher on the session yesterday but with a quiet, inside trading session. Strong gains in corn and meal helped to support the market while oil recovered from sharp losses early to close just slightly lower on the day. The soybean market had less support than corn as traders see improved chances for a decent rain event for the second half of next week for Illinois, Indiana and Ohio which could help stabilize soybean crops but may not help corn much. While outside market forces were extremely negative yesterday (weakness in stocks, energies, metals and a deflationary fear for the global economy), traders remain concerned with a threatening forecast for Iowa into next week. Some models show 1/4 to 1/2 inch of rain for Iowa into the weekend but temperatures are on the rise with mid-90's to low 100's for much of the state into the middle of next week. Traders see a continued rapid drop in crop conditions for the western Corn Belt. Cumulative export sales for soybeans stand at 104.1% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 100.1%. Taiwan passed on a combo tender for soybeans and corn. South Korea seeks 40,000 tonnes of non-GMO soybeans. Given the extremely dry topsoil conditions, the weather outlook into late July and early August will be critical for yield potential and without a change in the weather pattern, yield potential could drop well under the current US forecast.