Pre-Opening Soy Complex Market Report

July soybeans were down 3 1/2 cents late in the overnight session. Chinese soybean futures were up 0.2% overnight. Malaysian palm futures were down 1% and traded as much as 3% lower. Outside market forces look slightly positive today. The market traded both sides of unchanged overnight and the results of the USDA supply/demand update released before the opening should set the tone for the market today. The weather pattern is shifting, and the heat is set to leave the central US plains and the Midwest today and the eastern part of the Corn Belt tomorrow. After a good rain event into the weekend, the 6-10 day and 11-15 day forecast models look very "normal". The south stays hot and dry, which might provide some support. Flooding issues along the Missouri river and wet soils for planting in Ohio and Indiana could be considered supportive forces. November soybeans found support yesterday from concerns for double-crop soybean acres in the south which have not received a good rain for germination. Dry weather is a developing issue for the soybean crop in the south, but Midwest weather looks good for crops already planted. The market surged into the midday along with the other grains yesterday, but old crop July fell well off of the mid-day peak into the close. July meal pushed to its highest level since March 31st with talk of tightening short term supply due to slower crush pace, while July oil closed nearly unchanged. With many processing plants along the Missouri, short term production and meal supply could become an issue. Basis levels fell all along the Missouri River in the past few weeks, as producers scrambled to move grain before elevators and processing plants were disrupted with floods. This could provide support for products but could also pressure old crop soybeans, especially if rail traffic to processing plants is disrupted. Commercial hatcheries set 206 million eggs in incubators during the week ending June 4th, down 3% from last year. Poultry production and meal demand should be lower into August as a result. The National Grains and Oils Information Center believes that China will import near 5 million tonnes of soybeans in June, up 4% from May. The market pushed lower early in the session yesterday as traders expected higher ending stocks estimates from the USDA for the supply/demand report this morning. However, a turn up in corn and wheat values and then a push to limit-up for July corn helped to spark aggressive short-covering and buying. In addition to a higher US dollar and weaker outside markets, the market also saw early weakness from news from Brazil that the 2010/11 production for soybeans was revised to a record high 75 million tonnes, up from 73.6 million last month. Weekly sales are expected to come in near 250,000 tonnes from 155,500 tonnes last week.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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