November soybeans were 31 cents lower overnight. Malaysian palm oil was down more than 2.3% to end the day. The dollar was sharply higher on a breakout move overnight and crude oil was sharply lower.

The soybean complex staged a short covering rally yesterday, although gains in soybeans were far less impressive than gains in wheat and relatively less impressive than gains in corn. However, the soybean gains were more than reversed in the overnight session with a late break taking soybeans, meal and oil into new lows prior to that session's close. Traders indicate that crop weather in the US and India weighed on the market overnight, with even greater pressure coming from the sharp rally in the dollar. Traders are concerned that the higher dollar may cancel out some of the attractiveness that soybeans have seen in export markets recently, due to lower futures prices. Sources in India report that a mostly normal monsoon appears to be reemerging, which boosts potential oilseed production there. In addition, milder weather in the US Midwest and the northern Delta along with forecasts of regular rains across the Delta into next week are boosting yield prospects somewhat in the US as well. For now, most traders are looking for a small bump up in soybean yields on Tuesday's report with the number falling close to the USDA's trend line at just above 41.5 bushels per acre. A history of the USDA August supply/demand report shows that since 1974, the USDA has increased soybean production from July just 15 times. Of the years which they did raise production, the increase averaged 2.6% with a high of 6.4% and a low of 0.2% A 2.6% increase this year would come in near 3.078 billion bushels. A 6.4% increase would be 3.192 billion and a 0.2% increase would be 3.006 billion. Deliveries against the August contracts today were: 0 in soybeans and meal and 397 contracts in oil. This week's export sales were better than expected in soybeans, in line with expectations for meal and below expectations in oil. Net soybean sales were 374,400 tonnes for old crop and 245,200 for new crop for a total of 619,600. Net meal sales were 59,000 tonnes for old crop and 76,100 for new crop for a total of 135,100. Net sales of soybean oil were 3,600 tonnes for old crop and just 700 tonnes for new crop for a total of 4,300. Sales need to average 38,000 tonnes each week to reach the USDA forecast. China was the biggest buyer by far in soybeans on this week's report. Commercial hatcheries in the US set 207 million eggs in incubators for the week of August 2nd which is down 4% from last year. Chick placements were also down 4% from last year which is a negative indicator for meal demand into the fall.

Cooler weather has descended across virtually all major growing areas today except the southern Delta, and this is expected to continue into next week. In addition, dry and somewhat stressed areas of the Delta and the Southeastern US are looking for ongoing light to moderate rains on and off through Thursday of next week. No new tenders in soybeans. Egypt is in the market for sun oil and 20,000 to 25,000 tonnes of soy oil.