January soybeans were up 4 3/4 cents late in the overnight session. China futures closed 0.7% lower on the session, and palm oil futures in Malaysia were down 0.5%. While equity markets in Asia were mixed during overnight trading, stock indices in Europe are generally higher this morning. Early indications are that US equity markets will open slightly higher. There was talk overnight that the Chinese might have reduced reserve requirements for 5 smaller Chinese banks, and that could prompt some to suggest that China is indeed backing away from overt tight money policies. Spanish yields did show a rise this morning, but the markets weren't especially concerned about that news. The US Dollar is weaker against most of the major currencies. The second leg of the Treasury's refunding, the 5-Year Note auction, will have results announced at 12:00 PM. The Federal Reserve will release the minutes of the November 2nd FOMC meeting at 1:00 PM. Major US economic numbers to be released this morning include third quarter Gross Domestic Product at 7:30 AM, and private surveys of store sales released during the session. A firm tone to energy and metal markets adds to the positive tilt this morning. January soybeans traded down 7 cents overnight before a recovery bounce to trade higher, as futures followed the international stock markets. While there seems to be increased interest from China for re-stocking purposes, other short-term news is relatively quiet, and the market appears sensitive to movements in the financial markets. Favorable weather for getting a bulk of the South America crop planted and off to a good start is seen as a negative force. Traders are monitoring a few dry spots, but most see nearly ideal conditions for now. January soybeans put in the entire range of the session yesterday in the first 30 minutes of trade and closed more than 20 cents down on the day. The early break pushed the market to the lowest level since November 23rd of 2010, and the market closed near the lows. Commercial traders suggested interest from China on the break due to more profitable crush margins. A bearish view on the global economy and fears that the lack of progress on the US debt issue and continued debt issues in Europe may lead to recessionary pricing into early 2012. This helped to drive soybeans and most commodity markets sharply lower. Good weather for South America and ideas that US planted area will rise again in 2012 were also seen as negative forces. Weekly export inspections came in at 40.76 million bushels, which was down from 54.05 million last week but still well above the 23.5 million necessary each week to reach the USDA forecast for the season. Traders expected exports near 45-50 million, so the news was considered negative.
Join the Discussion