November soybeans are trading 10 cents lower near 7:30 am cst. Soybean meal and oil are lower as well. Malaysian Palm Oil futures ended near a 2 year low overnight as US soybean prices fall and palm oil stocks rise. Chinese equity markets were stronger overnight, as the PBOC stepped up and provided a serious injection of funds ahead of an upcoming Chinese holiday. While the Chinese move provided a cushion for European equity markets, recent protests in Spain and Greece combined with another rise in the German September jobless figures to generally leave sentiment toward the Euro zone on the rocks. While the US stock markets were showing positive initial action today, the expectation of slowing remain in place and the markets might be poised to take a lot of direction today from US claims and from an advanced US durable good result that could register a significant contraction. In short, the Chinese stimulus move overnight might be overshadowed by fresh slumping US data.
November soybeans have lost $2.26 1/4 cents since its high of 1789 on September 4th. Even more impressive is that $1.74 of that loss has come in the last two weeks. The dramatic fall in prices is mostly linked to better than expected yields across the Corn Belt, fears that China will continue to release domestic soybean reserves, and a return to unstable outside markets. All three have triggered liquidation by funds that were heavily weighted to the long side of the market heading into the beginning of September. Yesterday's traded volume was above average with 210,282 contracts trading and open interest rose by 2,576 contracts on the sharp move lower. The negative tone has carried over from yesterday as soybeans leak lower in early trade ahead of tomorrow' USDA report.
Many traders believe the September 1st Grain Stocks report will show stocks near 135 million bushels which would be down nearly 80 million bushels from the same period last year. Crush and exports are expected to be higher in the 4th quarter relative to the same period last year as the US has become the sole supplier of soybeans and soybean meal to the world market since South American supplies were cut.
Basis was mixed across the US yesterday with a processor in Lafayette, IN raising bids by 9 cents per bushel to 14 cents over the November contract. Decatur, IL bids were unchanged at 25 cents over the November contract. Davenport, IA river bids nudged slightly lower to 33 cents under the November contract. The high variability in basis movement across the Midwest reflects the pace of harvest in local areas. As futures move lower and harvest picks up speed, many farmers are expected to bring soybeans back to the farm. This could be supportive over time as processors begin to bid soybeans out of farmer's hands and exporters attempt to keep supply pipelines healthy to support their busy export book in October and November.
*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.
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