The soybean market is trading slightly lower overnight with the November contract down 4 cents near 7:30 am CST. Soybean meal is lower while soybean oil is trading slightly higher. The August soybeans are gaining on September after no deliveries have been made in the delivery period. There were no deliveries of August soybeans or soybean meal futures overnight. Soybean oil deliveries totaled 911 bringing the month to date total to 13,180. Chinese shares were higher overnight, with the Shanghai market managing more definitive gains than the Hong Kong market. European shares were weaker overnight as the anticipation of a European fix was waning and the trade was also looking ahead to a German debt auction for a reading on the level of anxiety toward all things Euro. More evidence of weakness in the European economy was seen overnight with the Bank of France predicting that France will slip back into recession in the 3rd quarter. Results from the German debt auction will probably be seen as a proxy for confidence or the lack of confidence in the Euro zone. The markets might also have been undermined by disappointing macro-economic predictions from a key BOE official. The US economic report slate is somewhat thin today with a 2nd quarter productivity growth reading and a 10 Year US Treasury auction at mid-session. Soybeans bounced on the open overnight but gains slowly eroded into this morning. There were reports that China purchased 4 cargos of US Soybeans yesterday which at any other time would put a bid in soybeans, however the focus in the market is currently profit taking ahead of Friday's report. Many traders and funds have carried long positions for some time now and are not willing to risk a surprise in the report that would wipe out profits. Weekly precipitation totals have favored the eastern Corn Belt and Southeast recently. Totals amount to 2-4 inches for states in the Southeast and slightly lower totals as you move north. The southwestern Midwest and western Midwest remain the critical areas that continue to have very poor soil moisture conditions and extensive rainfall will be needed to stabilize soybean crops. Temperatures are expected to moderate for most of this week but another round of 90-100 degree temperatures are expected next week for the central and southern Midwest. A chance of better rain for parts of the Corn Belt at the end of this week and next week offered resistance. Tropical Storm Ernesto is set to shift west towards Mexico, offering no extensive rainfall to the central and southern Midwest. Tropical storm activity has picked up in the Atlantic this past week. A closely followed market analyst suggests soybean stocks for major exporters in South America have fallen to 45.4 million tonnes, or a 22.5 million tonne drop from a year earlier. This has raised questions as to if Brazil soybean crushers will need to import soybeans from neighboring countries to support their local livestock industry. The strong export pace of soybeans and soybean meal by South American exporters has come as a surprise to most in the market given their sharply lower production this past year due to drought conditions. Cash markets have exploded this past week as domestic supplies tighten and the aggressive sales outlook going forward will likely weaken. This should give way to better exports for the US in the 4th quarter of 2012 and 1st quarter of 2013.
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