November soybeans were 18 cents lower overnight. Malaysian palm oil prices dropped sharply again overnight, falling by 5.4% at one point before finishing 3.7% lower. Traders continue to worry about more defaults. Crude oil was mixed to lower overnight and the dollar was mixed to higher.

A drier trend in the Midwest of the past few weeks and the outlook for mostly dry weather this week has helped provide support, as traders continue to believe that near perfect conditions will be necessary for the remainder of the growing season. A sharp rally to limit up in the most heavily traded soybean, meal and oil contracts yesterday was capped off by near limit up closes. Prices retreated from those levels overnight with soy oil once again leading the way lower. Concerns over a build up in palm oil supplies and the need to move them onto export markets soon has reportedly caused sellers to load shipments even when there is good reason to fear that a contract will be defaulted before it can be offloaded at its destination. India's reported deferral this week of 100,000 tonnes that had been scheduled for August delivery is an example of cutting the loading schedule awfully close according to one analyst. Dry weather across most major growing areas over the past 7-10 days, especially those east of the Mississippi, is causing some concern. The weekly Soybeans Conditions report showed 62% of the overall soybean crop rated good/excellent compared to 63% last week and 54% last year. The 10 year average for this time of year is 56%. Ohio conditions slipped 5% and Illinois was down 4%. Commercials are reporting low pod counts for soybeans in a number of Midwestern growing areas south of Minnesota with a major crop tour suggesting the same for Ohio as of yesterday.

Dry conditions are starting to be a concern in the Midwest. A vast stretch that includes virtually all major growing areas east of the Mississippi along with SW Iowa and the eastern and western thirds of Missouri have received 1/4 inch of rain or less over the past 7-10 days with further dryness predicted over the next 2-3 days or longer. Much of this area has actually received less than 1/10 inch over that stretch. While this will not ruin the crops, it can push the corn yield back below the trend line at 154.9 bushels per acre and could reduce yield for the late planted beans as well. Nebraska has received ample rains over this period and Minnesota is said to be in better shape than other major growing areas despite receiving only light to scattered moderate rains over the past two weeks. The next rain in the Midwest looks to be on Friday in the central and north central soybean belt with somewhat more general coverage moving from NW to SE over the weekend. South Korea bought 45,000 tonnes of meal from India or South America.