November soybeans are trading 1 3/4 cents higher near 7:30 am cst. Soybean meal saw modest losses while oil was slightly higher. Malaysian Palm Oil futures ended higher on the day but held within its recent trading range. Pressure continues to come from a rise in stocks but this is being offset by a greater share in exports. Chinese stocks were mostly higher overnight, with the Hang Seng reaching up to a fresh 7 month high. Once again the Chinese markets were lifted by strength in Banking and financial shares. European shares were mixed to slightly higher overnight with the CAC down early and the DAX higher. European investors could have been cheered slightly by a rise in Euro zone Construction Output and perhaps the markets were relieved that Moody's decided not to cut Spain's credit rating. US shares were mostly unchanged with the trade looking ahead to US housing starts and permits data that will be released later today. Expectations for the US Housing data call for a minor improvement in Housing starts, but not much change in the more forward looking Housing permits figures.
The soybean market continues to frustrate the bull camp given the explosive pace of demand and tightening oilseed supply outlook until harvest gets underway in South American late in the 1st quarter of 2013. The November contract rallied near the open outcry opening yesterday but gains slowly eroded throughout the session to settle near the low of the day. Volume was pegged at 163,746 contracts and open interest rose by 2,030 contracts. November soybeans failure to move above Monday's highs suggests a negative bias although the 1485 3/4 low continues to hold.
Soybean basis was steady to firm across the US yesterday. Bids in Decatur, IL were unchanged at 15 cents over the November contract while Sioux City, Iowa bids jumped 5 cents per bushel to 12 cents under the November contract. The barge market held steady yesterday with October bids holding at 75 cents over the November contract and November bids coming in at 83 over. The strength in the domestic and export soybean basis is expected to remain in place in the 4th quarter as exports and crush continue their robust pace. September crush was reported at 119.7 million bushels earlier this week which was down from 124.7 in August but up from 110.3 for the same period last year. The September crush was up 8% year over year for September while at the same time the USDA is estimating the total 2012/13 US soybean crush down 9.6% from last year. This could suggest that any further increases in the total US soybean supply will be offset by increases in crush and exports.
The South American weather forecast continues to look favorable with widespread rainfall expected for most growing regions of Brazil this week. Argentina will enter a dry period this week but showers are expected to return thereafter. Logistics and port delays in South America will be of great importance this year given the tight supply outlook and strong demand. The Argentina government has issued new program in which tonnage of grain that is set for export will need to be verified by officials. The increase in fees that stem from the program and paperwork is likely an attempt to maximize tax revenue by the government. Vessel loading has come to a halt as a result which could support nearby calendar spreads.
*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.
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