November soybeans were 65 cents lower overnight. Malaysia palm oil futures were down the 10% limit overnight. The dollar was sharply higher and crude oil was sharply lower, trading below $90 in the November contract overnight.

The November contract made a minor new low on Friday before closing very near the lows of that session. This was followed by a sharply lower move in the overnight session that traders credited to the idea that fears of an economic slowdown have evolved to include fears of a cycle of deflation in commodity markets. However, unlike similar sell offs over the past two weeks, gold was higher overnight. Asian vegetable oil markets were very sharply lower overnight amid renewed fears of defaults on previous purchases by buyers of palm oil. Traders said that the bearish sentiment also stems from the accelerated US harvest progress in soybeans last week and ideas from private forecasters that yield may be at or above the latest USDA forecast, raising crop prospects to over 3.0 billion bushels. Weather forecasts for this week are somewhat wetter than previously forecast, and this may cause temporary harvest delays starting today in the western soybean belt and Wednesday in the central and eastern belt. The Commitments of Traders Report for the week ending 9/30 showed that funds resumed selling in soybeans, but went the opposite direction in oil. In soybeans, trend-following funds were net sellers of 9,180 contracts while index funds were net sellers of 4,515 contracts. Small traders were net sellers of 3,253 in soybeans. This leaves the index funds still net long 130,092 contracts and trend following funds net long over 13,000. In oil, trend-following funds were net buyers of 3,151 contracts while index funds were buyers of just 893. Small traders were net sellers of nearly 2000 contracts in oil. In meal, large non-commercial traders were net sellers of 6,617 contracts and small traders were net sellers of 3,428. Deliveries against the October contracts today were 28 contracts in meal and 3,082 contracts in oil. Total deliveries in oil to date stand at 18,120 contracts.

Weather should be warmer in most harvest areas this week as expected, but it may also be wetter. A north/south system of rain is expected in western growing areas tomorrow, hitting Missouri, Iowa and Minnesota in particular, and this is expected to move as far east as Indiana and eastern Ohio by Wednesday. No new export tenders are scheduled.