November soybeans were trading near 1 1/4 cents lower late in the overnight session. China futures were down 2.1%, as global demand fears persist. Palm oil futures in Malaysia closed down 0.9%. While equity markets in Asia and Europe were generally weaker during overnight trading, early indications are that US equity markets will open with moderate gains. The US Dollar is generally weaker against most of the major currencies this morning, although posting a small gain versus the Pound. Fed Governor Lockhart stated that the largest threat to the US economy comes from the current Euro zone debt. The Governor of the Bank of Japan said his nation's economy continues to pick up but that global economic growth is slowing. German PPI during September was up 5.5% year-on-year, roughly in-line with market forecasts. UK Retail Sales during September were up 0.6%, higher than market expectations. Major US economic numbers to be released this morning include Weekly Jobless Claims at 7:30 AM, and the Philadelphia Fed business conditions index, a private survey of Existing Home Sales during September and a private survey of Leading Indicators during September at 9:00 AM. Some talk that China might be interested in deferring some of the contracts on their books from the US to a future date plus more and more talk that the global soybean demand is sluggish and fears of a weakening global economy are all factors which helped drive the market sharply lower yesterday. The fact that the USDA has yet to confirm the restocking purchases by China plus talk that private buyers in China, Europe and the US see sluggish demand due to weaker crush margins added to the negative tone. South American supply is near a record high for this time of the year, and while the USDA has lowered its US export forecast by 40 million bushels to 1.375 billion bushels, down from 1.5 billion last year and 1.499 billion two years ago, many traders see the slow export pace so far this season as a reason for them to revise exports down even further. A weak tone to the Gulf basis, the Chinese demand concerns and weakness from outside markets were all factors to spark the selling trend from speculators yesterday. November soybeans closed sharply lower on with an outside-day down and a close near the lows. The market pushed to the lowest level since October 12th. A sluggish demand tone plus weakness seen in a wide range of other commodity markets helped spark speculative long liquidation selling. Weakness in energy and copper markets helped spark a more negative tone on the global economy as the day progressed. Traders indicated some corn/soybean spread activity, which might have pressured the market after the early bounce. News that Taiwan rejected all offers for a tender to buy 40,000-60,000 tonnes of soybeans from South America or the US added to the negative demand tone. A lack of producer selling and talk that harvest has slowed for Illinois and points east helped to provide some support. The weekly broiler report showed eggs set into incubators were down 6.7% from last year, which suggests weaker meal demand in the months just ahead. Talk of more rain headed to Argentina to help ease soil dryness into plantings was also seen as a negative factor.
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