November soybeans are trading 11 cents lower near 7:30 am cst. Soybean meal and oil are trading lower as well. The overnight weakness is inked to profit taking after strong gains this week. Malaysian Palm Oil prices closed at their highest level in more than a month after yesterday's 3% gain in the US soybean market.
Chinese stocks were weaker overnight, as fears of further slowing were front and center after the head of the PBOC suggested that China would need all the tools available to stimulate the Chinese economy. With new of Japanese exports down sharply overnight and Japanese exports to China down by double digits in July, the increased liquidity effort news from the prior trading session in China seems to have been partially discounted. French and German shares were weaker overnight, as the Japanese export data rekindled European slowing fears again. It also seems as if hope, optimism and progress in solving the Euro zone debt debacle have at least temporarily stalled again.
The US scheduled report slate is rather thin again today with existing home sales from NAR the only scheduled US report due out. Expectations call for a slight increase in the home sales figures for July. During the session today, the market will see a Fed Speech from Charles Evans late today and the release of the FOMC meeting minutes in the early afternoon action. The soybean market continued its push higher yesterday after breaking out of a technical pattern earlier this week. Soybean open interest saw gains of 12,667 contracts on steady trade volume. Profit taking this morning is mostly linked to negative outside markets following the sharp price gains seen all week. November soybeans continue to see support from lower than expected pod counts being reported by a well-respected crop tour this week. Additional support is being seen from firm cash markets and relentless Chinese demand. The weather outlook this week and into next week is offering scattered showers for the central Midwest and southeast but accumulation is not expected to be substantial. Tropical storm activity has picked up in the month of August but unfortunately the chance for an increase in rain due to this activity is nearly 3 weeks too late. Late planted soybeans in the eastern Corn Belt could see minimal benefit from these storms if they track into the Gulf of Mexico and have the strength to push north into the Midwest.
This week's crop tour made their way through Nebraska and Indiana yesterday and pod counts were reported well below market expectations. Crop scouts pegged the Nebraska soybean pod count at 894.4 pods in a 3-foot area which was down from the 3-year tour average of 1,277.2. The Indiana pod count was slightly better and was estimated 1,033.2 pods per 3-foot area. This was down from the 3-year tour average of 1,190.4 pods. Some soybeans in Indiana have likely seen the benefits of the better rainfall over the last couple of weeks in the Eastern Corn Belt. Quality of pods and small plant size continue to be an area of concern in the western Corn Belt.
Soybean export premiums were steady to firm on Tuesday on reportedly strong demand from China. It is rumored that Chinese importers have booked 3-4 cargos of soybeans for October-November shipment this week. Soybean basis, delivered to the Gulf of Mexico rose 2 cents a bushel for October-December. Basis at processing facilities in the Midwest were mostly steady after a 3% rise in soybean futures prices yesterday. Central Illinois facilities are reportedly bidding 90 cents over the November soybean contract. Traders noted a slight pick-up in physical soybean movement. The tight supply outlook in South America continues to shift export demand to the US market. Brazil and Argentina may be forced to import soybeans from neighboring countries over the coming months, following their drought, just to finish sales commitments that are already on the books.
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