March soybeans were up 7 cents late in the overnight session to 1381 1/2 after posting a low of 1364 1/4. Palm oil futures in Malaysia were down almost 1% and China soybean futures were down 2.4%. Outside market forces are somewhat supportive with a weaker US dollar and a recovery in energy markets plus a positive tilt to equity markets overnight. The market saw continued weakness overnight and moved close to the level seen ahead of the USDA January 12th reports before catching support and moving higher on the day. Ideas that the Argentina crop has stabilized and might even improve plus talk that short-term demand for vegetable oils could ease during the Lunar New Year were seen as negative force to drive the market lower. Palm oil futures are sluggish this week even with talk that January palm oil production in Malaysia could be down 5-10%. Traders see continued good rains in Argentina through the middle of the week next week before the region might dry down again. Workers at the key export port of Rosario in Argentina indicated that they will block the entrance for loading ships and may also block the entrance for soybeans moving to crushing plants to six big companies. This could stop grain shipments and could slow or halt crushing at key plants located near the export port. The market was down sharply at the mid-session yesterday and lost another 10 cents late in the day as fund trader long liquidation selling was noted late in the day. The sharp sell-off in energy markets and weakness in equity markets soured the tone late in the day. Improving crop conditions in Argentina, a sharp break in crude oil and metal markets and a rally in the US dollar combined to spark fairly aggressive selling from speculators to drive the market sharply lower. The USDA confirmed a sale of 110,000 tonnes of US soybeans to China but indicated later in the morning that the sale was announced in error. The USDA also confirmed a sale of 2.74 million tonnes for China for the 2011/12 season which was thought to be the largest single-day sale on record. This is part of the sales announced from the trade delegation meetings last week. The USDA also confirmed a sale of 114,000 tonnes of US soybeans to Taiwan. Cash basis levels are said to be weak due to a slowdown in meal demand and weaker crush margins. Oil and meal were also under pressure into the mid-session with March meal at the lowest level since January 12th. Traders see increased talk from world politicians that more regulation may be needed to control food inflation as a potential negative force.
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