November soybeans are trading 5 cents lower near 7:30 am cst after recording a new record high at 1789 yesterday. Soybean meal and oil are trading slightly lower as well. Malaysian Palm Oil prices dropped to a 1-week low overnight on trader expectations of rising inventories. There were no soybean or soybean meal deliveries overnight but 1,260 contracts of soybean oil were delivered. Asian equity markets posted sizable losses during overnight trading, with the Nikkei down 1.09% and the Shanghai A Share Index down 0.29%. European stock markets are mixed this morning, with the UK FTSE-100 slightly lower while the German DAX is moderately higher. Euro-zone August PMI was revised down to 46.3 from the previous estimate of 46.6 and down from 46.5 in July. US stock indices are generally lower while the Dollar is moderately higher this morning. US economic data this morning includes a reading on Productivity and Costs for the second quarter of 2012.
November soybeans continue to be well supported from end user demand, reports of poor pod filling and positive domestic crush margins. However, the recent cooler and wetter weather in the eastern Corn Belt and Delta has benefited soybeans which could offer resistance to gains, in the short term. In addition, open interest is near 743,000 contracts vs. 598,896 this time last year. The recent surge in open interest may suggest that market conditions are slightly overbought and negative outside markets could lead to a brief period of profit taking ahead of next week's USDA report. Outside markets have taken on a "risk off" tone this morning which could prompt a more technical move lower in the short term.
This week's Soybeans Conditions report showed 30% of the US soybean crop was rated good/excellent which was unchanged from last week and near market expectations. The 10 year average for this time of year is 57% and the lowest rating for this time of year is 21% in 1988. Poor/very poor conditions were pegged at 37% vs. 38% last week. Minnesota, Iowa, Nebraska, and Missouri saw declines in good/excellent ratings after very little rain in the past two weeks has been seen in this region and temperatures have reached 95-100 degrees. Soybeans dropping leaves were pegged at 19% vs. the 5 year average 9%.
The advanced stage of maturity of this year's crop continues to leave doubt as to how much the recent rainfall has helped yield prospects. Cash soybean and soybean meal levels have a weaker feel after last week as new crop soybean harvest approaches for certain markets. Bids in Decatur, IL fell 25 cents per bushels to 35 cents over the November contract. Records show that basis levels for the same time last year in central Illinois were near 5 cents over the respective contract month. Traders are anticipating strong soybean sales as harvest picks up in specific markets due to the higher futures prices. Basis in the Gulf of Mexico has been steady this but river bids slightly weaker as some new crop bushels came to market. Export activity has been quiet this week after last week's rumored activity by China.
*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.