January soybeans were down 16 3/4 cents late in the overnight session. China futures closed 0.9% lower, and Palm oil futures in Malaysia were down 0.4%, closing lower for the third session in a row. While equity markets in Asia and Europe were mixed during overnight trading, early indications are that US equity markets will open with moderate losses. The US Dollar is stronger against most of the major currencies. There are reports that Belgium has asked to renegotiate the bailout of Franco-Belgium bank Dexia in favor of placing more of the burden on France. Today's auction of German 10-year Bunds failed to bring in bids for 35% of the maximum sales target. A private survey of Chinese manufacturing was at 48.0, lower than expectations. Euro zone Industrial Orders during September were -6.4%, much weaker than market forecasts. A private survey of German manufacturing during November was 46.9, also lower than market expectations. The final leg of the Treasury's refunding, the 7-Year Note auction, will have results announced at 12:00 PM. Major US economic numbers to be released this morning include Weekly Jobless Claims, October Durable Goods and October Personal Income and Consumption at 7:30 AM, a private survey of Consumer Confidence just before 9:00 AN, the Kansas City Fed's manufacturing index at 9:00 AM, and a private survey of mortgage applications released before the opening. A weak tone to energy and metal markets added to the negative tone this morning. Talk of a strong seasonal tendency for grains to close higher on the day before Thanksgiving, a more positive tilt to outside market forces, and talk of the short-term oversold condition of the market were all factors to support the soybean market late yesterday. However, traders did not think it would need to absorb poor economic news from China and Europe today and increased macro economic fears from the debt issues in Europe. A weaker manufacturing number from China could spark talk of slowing growth. China has been an active buyer of soybeans in recent days, but more of that business appears to be going to Brazil (and less to the US) than expected. While March forword bookings are normal for Brazil for this time of the year, news that China has booked more Brazilian February soybeans was seen as a negative development. A firming trend for Argentina soybean oil has been noted in recent days. News that China scrapped orders for near 300,000 tonnes of palm oil helped to pressure palm futures overnight. Soybean oil also received support from talk that early 2012 rebalancing of index funds could favor buying of soyoil. January soybeans closed 5 cents higher on the session yesterday and up 12 cents from the lows, after first moving to their lowest level since November 23, 2010. January meal also closed higher after a move to a 1-year low. A firm trade for energy and metal markets lent support yesterday, and the move in the opposite directtion overnight might pressure the market today. Traders appeared nervous about extending thier positions into the lower volume days coming up, and there is still a sense of significant macroeconomic threats into next week. As uncertainty increases, there is a tendency to see lower prices. In general, traders see soybeans priced at 1150 as historically expensive. Strong demand appears to be necessary to support the market at these levesl. China's demand appears to be strong, but US export sales are still well behind the pace needed to reach the current USDA forecast for 2011/12. In addition, traders view South American weather as favorable, and private analysts are raising their production outlooks. But while soil conditions are favorable now, traders see mostly dry weather and only light rains for the next few weeks for parts of southern Brazil and Argentina. This situation will be watched closely.
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