November soybeans are trading 4 cents higher near 7:30 am cst. Soybean meal and oil are trading slightly higher as well. Malaysian Palm Oil prices edged higher overnight on rising export data but gains were limited after The Malaysian Palm Oil Board reported August palm oil stocks above 2 million tonnes which was up 5.8% in August. There were no soybean or soybean meal deliveries overnight but 703 for oil to bring the total for the month to 5,944. Asian equity markets were mixed during overnight trading, with the Japanese Nikkei down 0.03% while the Shanghai A Share index was up 0.33%. European stock indices are generally close to unchanged levels early this morning, although Italian stocks are down by more than 0.50%. US stock futures are posting moderate losses during overnight trading, while the Dollar has recovered a small portion of Friday's huge selloff. The Chinese trade surplus during August was 26.7 billion Yuan, larger than expected and due in large part to a sharp drop in Chinese imports. Japanese GDP during the second quarter was up 0.7%, lower than market expectations. US economic data during today's session will include a reading on July Consumer Credit released after the close.
Pressure in the soybean complex was seen throughout last week as farmer sales picked up and perhaps on profit taking in long soybean, short grain spreads. Traded volume was average to at times below average which suggests no shift in trader sentiment, which has obviously been leaning towards the bull camp. The Commitments of Traders reports as of September 4th showed Non-Commercial traders were net long 246,713 contracts, an increase of 9,969 for the week. In addition, Trend-Following Funds (Non-Commercial net of CIT) held a net long of 208,234 contracts, up 9,816 for the week and just below the record net long at 224,822. Positions in Soybean Meal showed Non-Commercial traders were net long 76,637 contracts, an increase of
631, while Non-Commercial and Non-Reportable combined traders held a net long of 102,760 contracts, up 2,083 for the week. Lastly, Soybean Oil long positions for Non-Commercial and Non-Reportable traders were reported at 72,403 contracts, up 21,348 contracts for the week and compares with the record long position ever held by these traders is 108,505.
The weather forecast calls for scattered showers in the central Midwest this week but no major delays to harvest. Most areas will see a return to warmer and drier weather conditions which should promote good harvest progress. South American weather conditions are being watched closely as planting tries to get underway; however the dry conditions have delayed any such progress. Some forecasters have increased the likelihood for rain in Central and Northern Brazil the next 11-15 days while others maintain the drier outlook. The area is certainly trending drier and precipitation is needed. The world is anticipating record Brazilian soybean production, following last year's shortfall. A good start to the crop year will be needed, otherwise the market could begin to add risk premium to prices.
There continues to be much debate regarding the size of this year's US soybean crop. However, demand remains the bright spot among the bull camp. Chinese August soy imports were reported at 4.42 million tonnes vs. 5.87 in July, which is a 6 month low. While the sharp decline in imports is considered slightly bearish, a pullback was likely expected at some point after reaching a 25 month high in July. China has begun to release intervention stocks to their local market to stem rising prices, but despite this, exports to China are likely to continue moving forward as South America backs out of the market until their harvest next year. US soybean exports sales are already 60% of the current USDA estimate for 2012/13 vs. the 5 year average of 35%.
The market is expecting a soybean yield near 35.7 bushels per acre and production near 2.66 billion bushels on this week's USDA report which is down about 35 million bushels from last month. If attainted, this would leave ending stocks under 110 million bushels and would imply further demand rationing, which will be very difficult at current price levels. The recent rainfall in the eastern US and better conditions in the southeast and delta has certainly provided more hope for a better all-around yield in the US, however much of this progress is being offset by the stressful conditions in the western US, particularly Nebraska, South Dakota, and even parts of Minnesota. The western halves of Nebraska and South Dakota are expected to reach highs near 95 degrees today which will make matters worse.
*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.