November soybeans are trading 12 cents lower near 7:30 am cst. September soybean meal and soybean oil are lower as well. Malaysian Palm Oil prices slide lower on profit taking. Chinese equity markets were mixed overnight with shares attempting to rebound on extremely low trading volume. In fact, Shanghai shares reached the lowest levels in 3 1/2 years before recovering and that suggests the fear of a hard landing was revisited Chinese investors once again. European stocks were slightly weaker this morning off lingering concerns of slowing in Spain, but shares were being underpinned by hope of something supportive from the Fed symposium later this week. US shares continued to outperform the rest of the world, as investors have been spurred on by a surprise increase in merger and acquisition moves. The US economic report slate today is fairly active, with a private home price survey release, Consumer confidence and a Richmond Fed Manufacturing Survey.
Soybean ratings slide lower according to the weekly Conditions report. US soybeans are now 30% good/excellent compared to 31% last week and 57% last year. Furthermore, poor/very poor conditions rose 1% to 38%. The previous high for this time of year was 30% in 1988. The worst conditions remains limited to Kansas, Illinois, and Missouri, however the above normal temperatures and lack of rainfall for some areas of the Midwest last week added stress to maturing soybean crops. South Dakota conditions deteriorated. Soybean harvest progress was not reported but soybeans dropping leaves were pegged at 8% vs. a 5 year average of 4%. Brief delays in harvest may be seen in the southern Delta this week as Tropical Storm Isaac bears down on the Gulf Coast. High winds and heavy rainfall could negatively impact the quality of crops as far north as Missouri.
Temperatures are expected to remains above normal for most of the central and western Midwest this week. Rainfall is expected to be light for all areas of the Corn Belt, except for the southeastern US where showers will be seen from the Tropical Storm. Added stress to maturing soybeans could limit yield potential for states like Iowa, Nebraska, and Kansas.
Chinese interest in US soybeans has been quiet so far this week following the purchase of up to 16 cargos last week. The high rate of buying suggests China is comfortable with coverage at price levels seen last week and this could provide a floor in prices in the short term. Cash basis at soybean processing facilities in Iowa and Indiana were down 30-40 cents from last week while Decatur, Illinois processor bids dropped 20 cents on the week. The weakness in the basis is due to increased farmer sales since last week and in anticipation of new crop harvest. Gulf premiums may find support in the short term after several commercial export terminals will begin to close and barge traffic from Baton Rouge, LA to the Gulf shuts down. This is due to Tropical Storm Isaac.
Traders in the market are beginning to adjust soybean yields to near 36 bushels per acre, or under, and some suggest production could reach 2.6 billion bushels vs. 2.692 billion currently projected by the USDA. If total production were to reach 2.6 billion bushels, an additional 100 million bushels of soybean demand will need to be cut to maintain minimum pipeline levels and stocks to usage over 5%. Soybean volume has seen steady declines and open interest dropped by 5,558 contracts following yesterday's lower trade.
*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.