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NEAR-TERM MARKET FUNDAMENTALS: Weather forecasts are showing some divergence between warm temperatures over the short term and colder temperatures, and possibly a frost, in the 6-10 day timeframe. Some traders indicate that the soybean complex is taking its cues from the dollar and crude oil on a shorter term basis and the dollar was sharply lower overnight. Gold and other markets are also shows signs of nervousness over inflation, and traders say that this may be the underlying support factor this morning. This week’s Crop Progress report showed that 40% of the US soybean crop is now dropping leaves, a final stage in the maturation process. This is up substantially from just 17% last week. If this week’s weather is warm as is now being forecast, next week’s progress report should show a similar rapid advance. The condition of the soybean crop is rated at 67% good/excellent compared to 68% last week and 57% last year. The 10 year average for this time of year is 53%. The GFS weather model is showing an outbreak of cold air into the NW corn and soybean belts as early as next Monday. China’s minister of agriculture indicated yesterday that China did not plan to target US soybeans as part of its current trade row with the US over Chinese tire exports. However, he did not rule out the idea of trade sanctions at some point in the future. China imported just 3.13 million tonnes of soybean in August, down 29% from July and down from a record 4.7 million tonnes in June. August edible oil imports were 790,000 tonnes, down from 930,000 in July. Paraguay’s grain export chamber, or Capeco, said yesterday that the country’s soybean production may surge next year to 7 million tonnes. This compares to 3.4 million tonnes last year and the previous record of 6 million tonnes. Capeco expects the improvement to stem from increased acreage and a return to favorable crop weather.
TODAY’S GUIDANCE: The soybean complex is taking its cues from the dollar and other outside markets again today and that is leading it higher. However, the soybean crop advanced rapidly over the past week and more of the same can be expected this week. This remains the major price issue despite the possibility of frost in the northern or NW Midwest by the end of the month and into early October. With South American crops set to increase this fall and winter, in some cases sharply, the overall world supply outlook seems to reinforce the case for a break to well below the July lows. First support is near 903 to 905 in the November contract. Next support is near 881 1/4. First resistance is near 936 1/2 and then at 950 to 951.
