Lower grain prices and increased harvesting in the U.S. weakened soybean values in the last week. However, mixed yield reports from the Midwest harvest so far will keep trade interest high for the USDA's update of U.S. 2007/08 soybean output on October 12-and its impact on this month's supply/demand revisions that day.

This year's erratic growing season in the U.S.-bouts of heat and dryness mixed in with heavy downpours in parts of the western Midwest during August-are keeping trade expectations cautious. The trade's average production estimate is 2.648 billion bu., up just 29 million from last month-with this year's U.S. average yield up only a half bushel (to 41.9 bu.) vs. last month. Our expectations for this report are very similar with a 2.644 billion projection. Last spring's wet weather and other factors, which possibly reduced corn plantings, could increase soybean seedings on this report when this year's FSA insurance data is incorporated. However, late-season heat and dryness in the southern Midwest and South likely cut double-crop bean harvested acres, resulting in 175,000 lower harvest area this month. Yields might rise slightly in the Midwest (+0.8 in the east and +0.3 in the west), but limited changes in the Delta and Southeast keeps our U.S. yield at 41.9 bu., similar to the trade's level.

This year's strong overseas demand (similar to last year) suggests an upward revision in bean exports, which will compensate for a slightly larger old-crop carryover last month. However, this year's slower start to Brazilian plantings in the northern state of Mato Grosso, where the largest increase in seeding is expected, will likely be as important as the October crop report numbers.   With this year's harvest slightly ahead of its five-year pace at 50% vs. 45% and this year's smaller U.S. plantings, South America's growing season and final output will be a major price factor this winter-until these crops are more known. Hold 2007/08 sales at 35%-40% for post-harvest potential to the recent highs, up to $10.50 area where bean values topped in 2004. Feed users should cover their next six month's meal needs in the $250-$255 area, basis December.    

The information contained in this report reflects the opinion of NARMSinc and should not be interpreted in any way to represent the thoughts of R.J. The information contained in this report reflects the opinion of NARMSinc and should not be interpreted in any way to represent the thoughts of R.J. O'Brien, any of its affiliates, nor any of its employees. Futures and commodities trading involve significant risk and may not be suitable for every investor. Information contained herein is strictly the opinion of its author and is intended for informational purposes and is not to be construed as an offer to sell or a solicitation to buy or trade in any commodity or security mentioned herein. Information is obtained from sources believed reliable, but is in no way guaranteed. Opinions, market data and recommendations are subject to change at any time. Past results are not necessarily indicative of future results. Charts are developed by NARMS from USDA, other public data and proprietary models unless otherwise noted and credited.