March soybeans were up 1 1/2 cents late in the overnight session. China futures were down 2.8%. Malaysia palm oil futures were down 4.6%. Outside market forces appear somewhat supportive this morning with a weak US dollar and a firm tone to metal and energy markets. The market traded nearly 15 cents lower overnight but found some support and bounced slightly above yesterday's close late in the session. The ten-day break of as much as $1.71 may have left the market oversold, and there is some talk that the break might spark some increased demand. Massive long liquidation selling pressures helped drive futures to limit-down yesterday for a 70 cent loss. The surge higher in energy markets sparked an initial knee-jerk positive influence in many agricultural markets, but even with a recovery in gold, grain markets remained under pressure. Corn and wheat continued to fall overnight, but the soybean market showed some stability. China's equity markets were down sharply yesterday, and this sparked concerns that inflation will harden efforts by the Chinese to tighten policy further and slow the economy. News that China had rejected proposals to cut import tariffs on soybeans and soybean oil and continued good weather for the developing crops in South America helped to pressure prices. In addition, traders saw the Commitments-of-Traders reports from Friday as negative, as they showed an overbought condition. Trend-following fund traders (non-commercial less index funds) held a net long of 127,934 contracts on February 15th. This was down nearly 31,000 contracts for the week. The selling trend is seen as a bearish short-term factor. A sharp drop in open interest on Friday and off of the February 10th highs is seen as evidence of the long liquidation trend. Ideas that political tensions in the Middle East and North Africa could slow the global economy helped spark some of the long liquidation selling seen across a wide spectrum of markets. Weekly export inspections, released during the session yesterday, came in at 40.974 million bushels. This was much higher than expected, but the focus of attention appears to be on risk-adverse trade. European traders indicated that Egypt bought 25,000 tonnes of soybean oil and 16,000 tonnes of sunflower oil. South Korea bought 45,000 tonnes of soybean meal overnight for June delivery.
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