November soybeans are trading 16 cents higher near 7:30 am cst. Soybean meal edged higher overnight and oil posted another new high for the move. Malaysian Palm Oil prices were stronger and posted a new 6-week high. Exports of Malaysian palm oil products for August 1-25 rose 6.6%. Chinese stocks saw significant weakness overnight as the trade was disappointed in the lack of fresh easing hints from the Chinese Premier. European stocks were also softer off revived slowing fears and also because of comments from Bundesbank officials who were pointing out the potential pitfalls of European bond buying. With German Business Confidence also softening overnight, the trade enters the new trading week fearful that slowing could be poised to pull the German economy back toward recession. In the US, the economic report slate today has a couple regional Fed manufacturing reports due out, with the Chicago Fed Manufacturing report potentially taking center stage.
November soybeans have a positive tone this morning after gapping higher overnight. The supportive trade is linked to a worse than expected soybean yield and production estimate from last week's crop tour. The tour pegged the US average soybean yield at 34.8 bushels/acre, plus or minus 2% vs. the USDA estimate of 36.1. Total production was estimated to be 2.6 billion bushels. This is 92 million bushels below the current USDA estimate and suggests further price-rationing ahead. Some in the trade feel the yield and production estimates may actually be lower than tour estimates due to the fact the tour did not move through the entire state of Missouri, Southern Indiana, and Southern Illinois. Regardless, the reported yield fell under the low end of market expectations.
The Commitments of Traders reports as of August 21st for soybeans showed Non-Commercial traders were net long 254,598 contracts, an increase of 23,189 contracts for the week. Non-Commercial and Non-Reportable combined traders held a net long of 253,798 contracts, up 26,604. For meal, Non-Commercial and Non-Reportable combined traders held a net long position of 109,436 contracts, up 8,712 contracts for the week. These same traders hold a net long position in soybean oil of 34,383 contracts, up 22,888 contracts for the week. The reports were supportive as funds have begun to reenter the soybean market from the long side and open interest in soybeans as of August 21st has reached 1.23 million contracts vs. the record high of 1.26. The buying trend is positive but the hefty net long positions are a warning of an overbought condition.
The western Corn Belt saw showers over the weekend but accumulation was light. Morning radar has storm systems moving through Southern Illinois, Indiana, and Southeast Michigan. All eyes are on Tropical Storm Isaac this morning as it nears the Gulf Coast. The storm is expected to pick up strength and hit Hurricane status by 2 am Tuesday morning. The storm has shifted west over the weekend and the projected path has it hitting the Louisiana and Mississippi coasts by Wednesday morning. It will then push as far north as Arkansas, Western Tennessee, Missouri, and Illinois. High winds and heavy rainfall could have a negative impact on maturing row crops in this area but could aid Mississippi water levels in the short term. The 6-10 day forecast calls for a return of above normal temperatures and below normal rainfall for the central US.
Cash basis in soybeans and soybean meal were under pressure late last week but the downside should be limited as export demand remains at a high level. China's Ministry of Commerce sees August soybean imports at 5.3 million tonnes vs. previous estimates of 4.37 and 5.87 in July. Bids for loaded barges were quoted at 130 over the November contract early last week but going home Friday were bid 100 over. Harvest has begun in the south Delta and soybeans are moving down River to the Gulf of Mexico. This should pressure basis nearby but logistical and harvest disruptions could be supportive factors this week.
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