November soybeans are trading 16 cents higher near 7:30 am cst. Soybean meal edged higher overnight and oil posted a new high for the move. Asian stocks were weaker overnight, with the Shanghai composite closing at some of the lowest levels in several years. Apparently investors have become impatient with the wait for definitive easing action from the PBOC and there also seemed to be renewed concerns toward the Euro zone in Asia into the weekend. With dovish comments from a Fed member again overnight and a major US bond fund manager suggesting that QE3 was basically a done deal, it is possible that a large portion of the "buy the rumor" action off the US easing theme has been put in place for now. European shares were generally lower, despite relatively low sovereign debt rates overnight. The US report schedule today includes durable goods and expectations call for a modest rise in that reading. A sweeping reversal from an all-time high and an overbought technical condition leaves soybeans a bit vulnerable to increased volatility. This week's crop tour pegged the Iowa state soybean pod count at 999.8 pods per 3 foot square. This was below the tour's three-year average of 1255.5 pods. The Minnesota soybean pod count was estimated at 934.4 pods per 3 foot square, which was below the tour's three-year average of 1,115.9 pods. High pressure ridges in the western US in July pushed steady rainfall to the northern plains, however a sharp decline in rainfall and high heat the last 14 days have added stress to soybean crops during their pod filling stage of growth. This apparently has had a impact on yield prospects.
The 6-10 day weather outlook has a high pressure ridge setting back up in the west which should leave most of the central and western US warm and dry. Decent rainfall may shift to the northern and northwestern Midwest and any precipitation in the central Midwest will likely be light and scattered. There is a chance for better rainfall in Eastern Kansas, Missouri, and Iowa over the weekend but confidence is somewhat low in the development of the system. Tropical Storm Isaac is near Cuba this morning and is on a northwestern track towards the southern tip of Florida. The storm is expected to pick up speed and strength as it enters the Gulf of Mexico and has the potential to greatly impact the Gulf Coast region. The Tropical Storm will have limited benefit to row crops in the Delta and Southeast as they are well past the critical stages of growth.
Soybean basis in the Gulf of Mexico was steady to weaker yesterday; most of the weakness was seen in nearby values as 2012/13 export demand remains solid. August loaded soybean barges were bid near +105 over the November soybean contract which was down 5 cents from the day prior. Spot basis also fell in processor markets of Illinois and Iowa after physical soybean sales picked up this week following the gain in futures prices. A slew of new export sales were reported yesterday by the USDA. Private exporters sold 165,000 tonnes to China for 2012/13 delivery, 202,000 tonnes to an unknown destination, and 55,000 tonnes of soybean oil to China. The strong sales pace for 2012/13 is currently outperforming the 5 year average to meet the USDA estimate by 30%. The robust pace of sales suggests the strong Asian demand for soybeans and products with further sales still likely in December forward.
*Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.