Soybean prices surged on Tuesday closing 24 ¾ cents higher in the November contract. The gains erased almost all of the losses from the previous 2 sessions as this market has lost 90 cents in the last 8 days. Traders say with Tuesdays gap opening leaving behind the previous close adds strength to the move technically. Many rumors surfaced Tuesday of a major adjustment in Fridays USDA production estimates. Traders say talk of another 1 mil acre reduction in planted acres and reduced harvested acres due to abandonment of double crop beans and problems due to flooding that affected northern areas. Exports for last week were slightly larger than the previous week as well with weekly totals around 130 mil. bu compared to 105 to 107 for the last two weeks. Volume was extremely heavy trading 184,834 soybeans, 42,372 meal and 59, 481 oil. Funds were active buyers buying 6,000 beans, 2,500 meal and 2,500 oil.

Today's early opening calls are higher following the overnight market which ended and additional 17 ¾ cents higher on top of yesterdays gains. Weekly condition reports released after the close show Soybean harvest at 50% complete vs 29% last week, 43% last year and a 45% average. Minnesota and Illinois were notably ahead of normal and crop conditions were up 1% to 58% good to excellent. Estimates for Fridays Crop production report are at 41.95 bpa for beans with a crop of 2.648 bil. bu. This compares with the Sep USDA report of 41.4 bpa and a crop of 2.619 bil bu. Mounting worries about hot and dry weather in Brazil's northern soybean growing areas persist adding to the bean strength. Overnight Chinese Soybean, meal and oil futures closed higher. Malaysian Palm oil futures closed higher.

Early Opening Calls: Beans 10 to 15 cents higher, meal $ 5.00 to $ 8.00 higher and oil. 20 to .40 higher.

Top News

-- Friday USDA releases latest monthly crop supply/demand & world ag production figures. Analysts see soybean production at 2.65 mln bu and a yield of 41.9 bu/ac. Carryout is estimated to be 238 bu.

-- Analyst point to USDA's tendency to lower acreage in October report, however the market is talking about a reduction of 2 mln acres, which would be outside range of many estimates.

-- Dalian Soybean futures higher, active May +78 yuan/mt, soymeal & soyoil futures were also higher as Chicago futures & Asian palm oil futures higher.

-- Malaysian Palm oil futures finished overnight 7 ringgit higher at 2,599 ringgit or about $768/mt

-- Intertek estimates Oct 1-10 Malaysian palm oil exports 11.9% higher at 462,292 mt from 413,299 mt in the same period of Sept

-- SGS estimates Oct 1-10 Malaysian total palm oil product exports 44% higher at 484,670 mt from the 334,800 mt they estimated in same 10 days of Sept

-- 94% of Saskatchewan's crops have been harvested according to latest province ag report. Canola was 92% harvested up from 84% last week

-- Brazil's Abiove said August soybean crushings totaled 2.655 mln mt down 0.14 mln mt from year ago August

-- Argentine sunflower planting progress pegged at 16%, gaining slightly over last week - +2.5%, but still -4.1% behind last year's pace, acc. to BAGE

-- 2008 India rapeseed intervention price raised to $458.70/mt from $437.05/mt

-- USDA Soybean Export Inspections: 17.998 mln bu for week ending Oct 4

-- USDA soybean progress shows in latest week that good-excellent conditions rose 1% to 58%, while harvest pace rose to 50% vs last week's 21%.

-- DDQ launches 100% capital protected ag commodity fund, acc. to a company statement - the organization is already running a protected general commodity fund

-- eCBOT Vol. 132,392; Pit Vol. 43,967; Open Interest Change: -3,126

-- Weather: Above Normal Temps. Below Precip East, Above Precip West.

-- Outside markets: Energy complex: crude & active month products higher ; Gold & Silver both higher; US $ lower vs Euro, up against the Yen

Cash Markets

--CIF Soybeans steady firm . Oct. +25 to +34, LH Oct. +32 to +37, Nov. +45 to +53, Dec. +38 to +42, Jan. +45 to +50, Feb. +30 to +42, Mar. +35 to +45

Nathan T. Smith III

Linn Group

nsmith@linngroup.com

toll free: (877) 787-6278

local: (312) 896-2090

fax: (312) 896-2050

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