January soybeans were up 6 3/4 cents late in the overnight session. China futures closed 0.7% lower on the session and Palm oil futures in Malaysia were up 1.1% to a new 5-month high. Equity markets in Asia were generally lower during overnight trading and stock indices in Europe were mixed to slightly lower but early indications are that US equity markets will open with moderate gains. The US Dollar is weaker against most of the major currencies. The new head of the European Central Bank urged Euro zone governments to start their European Financial Stability Facility quickly. German PPI during October was up 5.3% year-on-year, in line with expectations. The only major US economic number to be released this morning will be a private survey of Leading Indicators at 9:00 AM. The weak dollar and a positive tilt to energy and metal markets helped to support overnight trade. The market seemed to have the short-term demand news to see higher prices this week but the bearish tone for outside markets and collapsing values for corn and wheat was enough to drive the market lower for the second day in a row yesterday. The technical action has been disappointing for the bulls who see active buying from China but weak technical action and the recent COT report showed that trend-following fund traders (non-commercial less index funds) still held a net long position of over 15,000 contracts. While there has been active buying from China this week to re-stock reserves, year-to-date soybean sales are still running 35% behind last year and traders see further revisions down in the US export outlook; especially if there is good weather in South America. Palm oil pushed higher again overnight with traders concerned with too much wet weather and the impact of lowering November production in Malaysia with some traders looking for a sharp drop from October. Meal exports remain strong the past few weeks but the domestic market is weak and continues to drift lower in search of better demand. Chick placements are running down 8% from a year ago for the past three weeks but egg sets are starting to improve slightly. South America weather is off to a strong start and traders will continue to monitor the situation with a few dry spots still occurring but there appears to be good rains for the next few weeks. January soybeans closed sharply lower on the session yesterday and saw the lowest close since November 29th of 2010. Losses were even more significant for corn and wheat but fund selling was active across the board. A firm tone to the US dollar and mounting concerns for the debt issues in Europe helped to pressure the market. Solid weekly export sales plus confirmation of sales to China failed to provide much support. Private exporters reported the sale of 420,000 tonnes of US soybeans to China. Net weekly export sales came in at 751,200 tonnes which was higher than expected and included sales to China of 517,100 tonnes. Cumulative soybean sales stand at 55.1% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 59.8%. Sales of 383,000 metric tonnes are needed each week to reach the USDA forecast. Meal sales came in at 201,500 tonnes which was also higher than expected. Sales of 102,000 tonnes are needed each week to reach the USDA forecast. Oil sales were just 2,100 tonnes which was well below expectations and compares with sales of 12,000 metric tonnes needed each week to reach the USDA forecast. January meal pushed down to the lowest level since November 22nd of last year.
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