November soybeans were 46 cents lower overnight. Malaysian palm oil dropped up to 8.7%. Crude oil was sharply lower overnight and the dollar was sharply higher.

Soybeans staged a modest recovery rally yesterday along with meal, but hopes for a further bounce were dashed after the close with the late, sharp sell off in stocks. Prices were sharply lower again overnight as a result, although November soybeans managed to hold Wednesday's lows, and the overnight break was not as sharp as some recent breaks. The grains and the soybean complex are being hit with a wave of fundamental news to end the week. This morning, the USDA will issue its latest Supply and Demand and Production Reports. These are expected to show increased beginning stocks for soybeans after the negative Quarterly Stocks numbers along with a minimal decrease in yield and production. However, the bigger carry in and possible lower demand are expected to bring an increase in ending stocks for soybeans. Yesterday, the USDA released a weekly Export Sales Report that was far rosier than what the market is expecting this morning. It showed demand for soybeans and meal that was above expectations. Net sales for soybeans came in at 602,400 tonnes. Cumulative sales stand at 40.6% of the USDA forecast for 2008/2009 versus a 5 year average of 36.4%. Sales of 339,000 tonnes are needed each week to reach the USDA forecast. Net meal sales came in at 204,500 tonnes. This helped offset bearish news from the poultry industry on Wednesday. Cumulative meal sales stand at 21.9% of the USDA forecast for 2008/2009 versus a 5 year average of 25.6%. Sales of 118,000 tonnes are needed each week to reach the USDA forecast. Net oil sales came in at 8,000 tonnes. Cumulative oil sales stand at 13.7% of the USDA forecast for 2008/2009 versus a 5 year average of 17.3%. China was the biggest buyer of soybeans and Guatemala was the biggest buyer in meal. Deliveries against the October contracts were 462 in meal and a very small 67 contracts in oil. Basis levels have been firm at the Gulf recently due to lower futures prices, a scarcity of barges and good export demand.

Forecasts remain the same. Basically warm temperatures in most harvest areas with mostly dry weather in the Midwest through the weekend. A rain system is expected to move from west to east across major growing areas on Monday and Tuesday followed by another patch of mostly dry weather next week in most of the Midwest. No new export tenders are scheduled.