March soybeans were down 11 cents late in the overnight session. China futures closed up 0.1% overnight, and Malaysian palm oil futures closed down 1.1% on the session. Equity markets in Asia were stronger overnight, but they did fade into the close. European stocks this morning were generally weaker, while US equity markets were positing moderate losses to start the Thursday US trading session. The US Dollar has started out higher against the euro, and it was also strong against the rest of the currencies. Overnight the market saw generally favorable Euro zone economic readings, and it would seem like the French debt auction was carried out without too much overall anxiety. In looking ahead, the markets will see a series of private employment readings, a private layoff report, weekly claims figures from the US and an ISM Non Manufacturing data point. Also due out during the session today are more private chain store sales readings for the month of December. The strong dollar leaves outside market forces negative for now. Deliveries for January soybeans were 335 contracts this morning with 33 meal and 339 oil delivered. A strong US dollar and continued debt concerns in Europe helped to pressure the grain markets overnight. In addition, traders have increased rain coverage for Argentina for Tuesday and Wednesday of next week, with a cold front moving in to reduce temperatures as well. In addition, some traders see better rain in the extended forecast models as well. However, traders do not see a shift in the weather pattern yet and this could continue to leave below normal precipitation for key growing areas of Argentina and southern Brazil. March soybeans closed slightly higher on the session yesterday after choppy and two-sided trade. Meal closed higher and near the highs while soybean oil closed lower on the day. Some forecast for better rain coverage for the Argentina January 10-11 rain event plus a slightly negative tilt for outside market forces helped to trigger the choppy trade. A stronger US dollar and weakness in equity and energy prices helped to pressure. However, minor support held on the early setback as traders believe that a continued dry weather trend for Argentina is causing increased stress. A large brokerage firm cut their production forecasts for Argentina due to recent hot and dry weather. Soybean production was cut 3 million tonnes and corn harvest potential is down 5-7 million tonnes. Traders see early February weather as the most critical for soybean production in South America so some traders still see the chance of a large crop. Brazil exports were much stronger than normal for December suggesting a lack of near-term tightness. Broiler producers reported that weekly eggs set were down 4% from last year and chick placements were down 3% so meal demand looks to remain sluggish into the February/March time frame. If South America production estimates continue to decline with poor weather for the second half of January, traders may begin to revise US exports higher.
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