November soybeans were trading 14 3/4 cents higher near 7:30
am cst. China futures were up 0.8% this morning and Malaysia palm
oil futures pushed up 2.3% to a one-month high. Chinese stocks
were mixed in the wake of the latest domestic economic measures
which showed the softest PMI readings of 2012. Most stock markets
in Europe were tracking slightly higher today despite the slack
Chinese data from overnight and that suggests the benefit of the
EU summit has at least partially lived through the weekend.
However, many market participants will still be watching
sovereign debt yields in Europe for a real reading on the current
condition of the European debt crisis. The US scheduled report
slate today will bring a US Manufacturing PMI report,
Construction Spending and a Online Help wanted report that might
be given added attention because of the Monthly Non-farm payroll
report due out at the end of this week. There were no deliveries
posted for July soybeans for the second session in a row. There
were no meal deliveries and none so far with oil deliveries this
morning at 2,464 contracts to bring the total this month to
4,775. While there were some violent thunderstorms over the
weekend, about 2/3rds of the Midwest missed out on rain and mid
to upper 90's for the Midwest this week could cause extreme
stress on some of the southern Midwest and northern delta fields
this week. There were 1,800 record high temperatures posted from
reporting stations in 39 states this weekend with all-time
records posted for Denver, Dodge City Kansas, Ft Wayne and
Nashville. At Midway airport in Chicago, there was less rain for
any June in 84 years; according to Tom Skilling. Some rains are
expected across the northern Midwest and then down to parts of
northern Indiana and into Ohio this week but crops in southern
Indiana and Illinois, Missouri, southern Iowa and Nebraska may
see significant deterioration in crop conditions. Soybean June
1st stocks came in at 32 million bushels above trade expectations
which helped to ease old crop ending stocks concerns but the new
crop outlook remains extremely tight. The weather in late July
and early August will be key to the soybean outlook but the June
weather was bad enough to revise yield lower. If actual yield
slips to 42 bushels per acre from 43.9 as the current USDA
forecast and there are no adjustments to 2012/13 demand, ending
stocks slip to just 92 million bushels which is a stocks/usage
ratio of 2.8%, a new record low. This is likely below pipeline
minimum and would suggest further price rationing ahead. Keep in
mind: if yield expectations slip to 40.8 or below, total supply
would come in below the USDA usage estimate for the season.
Planted acreage for soybeans came in at 76.08 million acres,
which was above trade expectations for 75.5 million. Traders
believe the higher acreage estimate is partially based on acres
which may not get planted with dry soils in double-cropped areas
of the southern Midwest. Furthermore, the market is anticipating
increased international demand for U.S. soybeans after a
disastrous year of production in South America. In fact, the USDA
sees US demand up only about 1 million tonnes even with a drop of
about 18 1/2 million tonnes in production from Brazil and
Argentina. A more bullish tilt to outside market forces and the
weather outlook was more than enough to offset bearish news from
the USDA on Friday. The market is also seeing support on
expectations that the Crop Progress report this afternoon will
show another sharp drop in good to excellent ratings. The
Commitments of Traders reports as of June 26th showed a general
overbought condition for soybeans and meal. For Soybeans,
Non-Commercial traders were net long 231,364 contracts, an
increase of 14,097 contracts for the week. This is just shy of
the record net long of 259,763 contracts. Non-Commercial and
Nonreportable combined traders held a net long of 217,815
contracts. This is up 19,833 contracts for the week compared with
the record of 220,823. For meal, Non-Commercial traders were net
long 90,629 contracts, an increase of 1,096 for the week.
Non-Commercial and Nonreportable combined traders held a net long
of 111,278 contracts. The record high is at 128,591. For Soybean
Oil, Non-Commercial traders were net short 39,673 contracts, an
increase of 3,801 contracts for the week and this leaves the
market oversold. Commodity Index traders held a net long of
82,643 contracts, up 1,674.