Pre-Opening Soy Complex Market Report

November soybeans were up 13 3/4 cents late in the overnight session. Malaysian palm futures closed 0.8% higher on the session, and China soybean futures closed up 0.55%. Outside market forces look positive today with talk of agreement to raise debt ceiling helping to support commodity markets and to pressure the US dollar. Meal deliveries against the August contract this morning came in at just 3 contracts, and oil deliveries were 722, down from 1,324 on Friday. There are still no deliveries for August soybeans. New from Washington last night was enough to give most commodity markets a boost, and there was a slight trend for a little less rain for the southern sections of the Midwest in the overnight models. However, the weather outlook for soybeans as the crop moves into a more weather sensitive time frame could help boost crop conditions into next week. Rains eased dryness concerns in some areas last week, and traders see most of the Midwest getting some rain in the next ten days and cooler temperatures as a positive for the crop. Traders still see crops rated good/excellent falling another 1-2% for tonight's weekly update. While the US government news was positive overnight, China economic news continues to worsen as the China Purchasing Managers Index fell to 50.7 in July from 50.9 in June, with the 4th month in a row of a decline. This suggests a slowing economy in China's manufacturing and seen as a potential negative for commodity markets. The Ministry of Commerce believes that China will import nearly 3.15 million tonnes of soybeans in August, which is down 34% from last year and down from 4.97 million tonnes in July. However, China was showing interest in new crop soybeans last week from the US, as the jump in soybean basis in Brazil may have helped US soybeans look a bit cheaper. News that China bought 220,000 tonnes of US soybeans for the 2011/12 season on Friday did not seem to provide much in the way of support, with the focus insread on weather and activity, or lack of activity, in Washington. With the debt ceiling talks thought to have come to a compromise, the market saw short-covering buying overnight, but the upside may be limited unless the weather trend shifts. Traders see rains moving into central and southern Midwest locations in the next week and also much improved rains for central and eastern delta growing regions. The soybean market's move to its lowest level since July 12th has attracted increased long liquidation selling pressure. Afternoon selling from funds as well as the activation of stops from speculators pushed the market sharply lower for the session on Friday, taking November soybeans sharply lower for the week. Sluggish demand news, a better weather outlook and selling in other grains helped pressure. The Commitments of Traders reports as of July 26th for soybeans showed non-commercial traders were net long 117,778 contracts, an increase of 7,069. The buying trend is seen as a short-term positive force. Commodity index traders held a net long position of 168,961 contracts, an increase of 1,890. For meal, non-commercial traders were net long 32,465 contracts, an increase of 8,983 contracts for the week. Non-commercial and nonreportable traders combined held a net long position of 49,157 contracts, up 11,863 for the week. For oil, non-commercial traders were net long 25,344 contracts, a decrease of 8,853 for the week. The long liquidation selling trend is seen as a short-term negative force.

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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