November soybeans were 18 1/2 cents higher overnight. Malaysian palm oil prices were up 3.8% overnight. The dollar was lower, and crude oil was moderately higher overnight.

Soybeans traded sharply lower early yesterday with traders crediting the losses to a sharp rally in the dollar. However, prices generally firmed across the complex during the day yesterday, with soybeans finishing slightly lower and meal finishing slightly higher. The entire complex moved higher overnight, with support said to be coming from a weaker dollar and higher crude. China's Grains and Oils Information Centre (CNGOIC) pegged this year's soybean crop at 17.5 million tonnes. This is up 37% over 2007 due to an 11% increase in planted area, more effective use of chemicals and good rains in central and NE China in recent weeks. The production outlook appears different in the US, where dryness during the critical development stage for soybeans has many analysts shaving 1/2 to 2 bushels per acre off the latest USDA estimate. A loss of more than two bushels per acre would wipe out the entire 2008/09 projected ending stocks if usage numbers are not adjusted. Basis levels traded at 90 over the September futures for nearby delivery at the Gulf yesterday amid extreme tightness in the export pipeline. A late harvest in the south and navigation problems on both the Illinois River and the Upper Mississippi is contributing to the supply problems.

The Midwest was as dry as a bone in most areas over the past 24-36 hours, with the remains of Tropical Storm Fay chugging slowly eastward and staying mostly south of the Ohio River until late overnight when moderate rains pushed into southern Ohio. Dryness is, therefore, still the main news in the Midwest, and to illustrate the point Chicago is experiencing its driest August in 45 years. Showers are expected in Minnesota and parts of Iowa today with Minnesota and Wisconsin getting more rain tomorrow. On Friday, this system is expected to push into central and eastern growing areas. Amounts are expected to be light to moderate. Temperatures are forecast to be slightly above normal into early September. There are no new tenders to report.