November soybeans are trading 2 cents lower near 7:30 am cst. Soybean meal is higher in early trade while oil is lower. Malaysian Palm Oil prices traded down to their lowest level in almost a month as traders turn cautious after the Malaysian Palm Oil Board reported stocks at a 10 month high. There were no soybean or soybean meal deliveries overnight but 534 deliveries of oil were made bringing the total for the month to 7,102. Asian equity markets were generally lower during overnight trading, with the Japanese Nikkei down 0.79% and the Shanghai A Share index down 0.67%. European stock indices are under pressure this morning, with Spanish and Italian equities down close to 1.00%. However, US stock futures are posting moderate gains during overnight trading while the Dollar is trading lower coming into this morning's session. The UK Trade deficit during July was 7.15 billion Pounds, lower than market expectations. German Wholesale Prices during August were up 3.1% year-on-year, higher than market forecasts. US economic data during today's session will include a reading on the International Trade Balance during July.
The lower trend in November soybeans continued yesterday and the market has now seen 6 straight lower highs since the record high of 1789 was established. Traders holding large long positions seem nervous heading into the report and continue to take profits, despite the positive fundamental outlook. Volume was extremely light yesterday with just 115,362 contracts trading and open interest fell by 4,189 signaling profit taking. The lower volume and OI may suggest traders lack confidence that this is a large correction in the longer term price trend.
The first weekly Soybeans Harvest report of the season showed 4% of the harvest complete vs. 1% the same time last year. The 10 year average for this time of year is 1%. Harvest weather looks good this week with scattered showers for the central Midwest but nothing to suggest any major delays in harvest. The weekly Soybeans Conditions report showed 32% of the crop was rated good/excellent compared to 30% last week and 56% last year. The 10 year average for this time of year is 56%. Like corn, improved conditions were seen in the eastern Corn Belt but downgrades were seen in the western Corn Belt. Thoughts that recent rainfall and cooler temperatures have helped pod filling is offering a negative tone to the market. The 5 lowest rated states include Kansas, Illinois, Indiana, Nebraska, and Missouri.
A depression has developed just east of the Caribbean Islands and the National Weather Service states it has a 90% chance of becoming a Tropical Cyclone with a North/Northwestern track. The storm should be monitored to see if it moves into the Gulf of Mexico. Central Brazil remains extremely dry with the last rainfall in Mato Grosso occurring 115 days ago. Soybean planting can officially begin next Saturday but farmers will wait due to dry soil conditions. The delay in planting will not have an impact on soybean yields unless they are extend out to 3-4 weeks. However, a planting delays could push harvest back which may impact shipping logistics in February and March.
Soybean basis was steady to slightly weaker yesterday with Illinois River bids dropping 5 cents per bushel. Decatur, IL soybean bids were unchanged at 20 cents over the November contract. Better than expected yields were reported in areas of eastern Iowa but harvest is just beginning for early planted soybeans. Basis and nearby calendar spreads could see further weakness as harvest picks up its pace.
*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.