November soybeans are trading 9 1/2 cents higher near 7:30 am cst. Soybean meal and oil also posted sizeable gains overnight. Malaysian Palm Oil prices traded higher overnight after the Fed announced their stimulus plans. There was no soybean or soybean meal deliveries. There were 223 soybean oil deliveries bringing the month-to-date total to 8,046 contracts. Asian equity markets posted sizable gains during the overnight session, with the Japanese Nikkei up 1.83% and the Shanghai A Share Index up 0.64%. European stock indices are generally stronger this morning, with Spanish, Italian and French equities up by more than 2%. US stock index futures have extended their post-FOMC rally up to new highs for the move, while the Dollar has plunged to the lowest price level for 2012. The Federal Reserve's Open Market Committee announced a fresh round of "open-ended" quantitative easing measures at yesterday's meeting, and targeted a reduction in the US Unemployment rate down to 7.6% and extended their zero-interest rate policy out into mid-2015. Euro zone inflation during August was up 2.6% year-on-year, in-line with market forecasts. Today's US economic data will include readings on the August Consumer Price Index and August Retail Sales.
November soybeans surged to new highs for the week. The bounce off the 1700 level for November soybeans along with strength in soybean products continues to add support to the soybean market. The Federal Reserve announced plans to stimulate the US economy further yesterday which sent the US Dollar lower, and added to the positive tilt. Volume was recorded at 168,066 contracts yesterday and open interest saw a slight decrease. Harvest progress is expected to pick up this weekend and next week so hedge pressure may move into the market as we approach the record high from September 4th. Despite this, the robust export demand outlook and surging domestic prices in South America due to their low inventory levels may keep strong underlying support in the market.
Cumulative export sales for the new crop season have reached a whopping 72% of the current USDA export forecast vs. the 5-year average of 36%. The 4-week average for soybean sales is 616,000 tonnes and only 155,000 are needed each week to meet the current forecast of 1.5 billion bushels. At the current 4-week average rate of sales, we will meet the USDA soybean export forecast by December 6th of 2012. Clearly, a surge in soybean prices may be needed in the short term to ensure adequate domestic supply.
Domestic soybean crush margins remain at profitable levels with estimates for processors in the west near 65 cents per bushel and processors in the east near 75 cents per bushel. A weaker tone to the soybean meal market in the west vs. the east has trimmed margins but commercials are adjusting soybean basis lower to account for the squeeze. NOPA crush for the month August came in at 124.77 million bushels which is down from trade estimates near 128.3 million but still up sharply from 118.8 million bushels last year.
Dry weather continues to hamper planting progress in areas of Brazil. Motto Grosso hasn't seen decent rainfall in over 100 days and planting can officially begin this Saturday, however no progress is expected to be made due to the dry conditions. The outlook the next 2 weeks does not offer much relief and an extension of the dry pattern may soon lead to cuts in yield potential.
*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.