November soybeans are trading a 3 cents higher near 7:30 am cst. Soybean meal is slightly higher while oil is lower. Malaysian Palm Oil futures dropped to their lowest level in 11 months on rising inventories and on weakness in soybean prices yesterday. Chinese equity markets were stronger overnight, as investors there were seemingly cheered by a rebound in a host of physical commodity prices. European equities were also higher today seemingly boost by solidarity talk from ECB officials and perhaps because of positive leadership from physical commodity stocks. US stocks were also showing signs of strength in the early going today, as prices managed to regain critical chart levels and now some segments of the metals market seem to be poised to return to the recent highs. The US economic report slate today is somewhat thin, with a 3rd or 4th tier mass layoff report due out and a speech from the Fed's Lockhart expected to impact the trade.
Soybeans are on track to post their largest weekly loss in a year as better than expected yield reports continue to circulate and slowing world economies continue to be a drag on the commodity complex. Despite the sharp decline yesterday, November soybeans were able to bounce overnight as Chinese markets turned positive and the US dollar turned lower. November soybeans traded as high as 1639 overnight but since then the US dollar has strengthened and soybeans are now hovering just above the overnight lows at 1616 3/4.
Soybeans traded weaker in early trade yesterday but the downside momentum accelerated following the release of a report that suggested the national average soybean yield could be as high as 38.7 bushels per acres vs. the current USDA forecast of 35.3. The report focused much of their research on yields in Minnesota and South Dakota which has left many in the market to speculate as to accuracy of the report. None the less, early yield reports in this region have been surprisingly good despite the dry conditions in August. The market was rattled by the news and technical selling began to intensify.
Cash basis in the Gulf of Mexico was steady yesterday as futures fell sharply lower. Basis was supported on thoughts that China has bought soybean cargos this week on the dip in prices. It is estimated that China booked 3-4 cargos yesterday. Crushers in China continue to struggle with poor margins which is supportive to the long term export demand outlook for US Soybeans.
Domestic cash basis was mixed across the Corn Belt yesterday as harvest progressed. Decatur, IL dropped their bids by 10 cents per bushel to +15 cents over the November contract. This is a new 4 month low. Soybean bids in Lafayette, IN rose by 5 cents per bushel to 15 cents over the November contract as farmers have lost interest in making new sales due to the dramatic decline in prices.
*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.
Copyright CME Group All rights reserved.