November soybeans are trading 8 cents higher near 7:30 am CST following yesterday's sharply lower trade. The overnight session saw marginal gains after the release of yesterday's crop conditions report. Soybean meal and oil are trading stronger as well. There was no August soybean or soybean meal deliveries overnight. There were 167 August soybean oil deliveries bringing the month to date total to 14,883. Chinese shares were higher overnight, but gains seemed to come from defensive investment in stocks that are expected to perform well in slow conditions. It is also possible that Asian shares were assisted by talk of fresh easing moves from the BOJ overnight. European shares were higher overnight, as France and Germany posted data that wasn't as bad as some fears. The German market also held up despite a sharp drop in economic expectations and predictions of even more slowing ahead from the widely followed ZEW. Economic data flow from the US will become a little more active today, with a PPI report and retail sales for July due out. With a modest rise in US retail sales expected and initial action in equities carving out some upside action, there would appear to be a slight risk-on vibe to start today. Soybeans managed to scratch out a slightly higher trade overnight but gains were extended this morning. The weekly crop conditions report offered limited guidance to soybean traders. The Soybeans Conditions Report showed 30% of the crop was rated good/excellent compared to 29% last week and 61% last year. The 1% increase in ratings was in line with market estimates. The 10 year average for this time of year is 59% and the lowest rating for this time of year was 23% in 1988. Northern Corn Belt and South Delta states continue to have some of the more favorable ratings as ridging weather patterns since early July have push moisture farther north and east, leaving states in the central and western Midwest parched and stressed. Illinois, Indiana, Kansas, and Missouri all have poor/very poor ratings over 50%. Soybeans setting pods now stand at 83% vs. 71% last week and the 5 year average is 70%. Recent rainfall and the drastic shift to cooler temperatures have stabilized soybean conditions in the north, east, and central Midwest over the last week. This weather pattern is forecasted to stick around the rest of this week. Traders question how much damage has already been done to soybean plants given the accelerated rate of growth this year. Some crop reports indicate that soybean plants have already begun yellowing in areas of delta, southeast, central, and western Corn Belt. This stage of growth is nearly 2 weeks ahead of schedule and implies that no yield improvement is capable from here on out. Some traders reduced 2012/13 average US soybean yield to 36 bushels/acre this week to come in line with the USDA. NOPA will release it's July crush this morning and the market is expecting crush near 132.5 million bushels which is down from 134.2 million bushels in June. Crush for the same time last year was pegged at 122.9 million bushels. China food prices rose last week with most gains limited to vegetable, pork, and beef products. This was the 4 straight week of gains and the inflationary outlook could mean China is still a buyer of 2012/13 soybeans on significant setbacks in prices going forward.
Join the Discussion