March soybeans were trading up 11 1/2 cents late in the overnight session. China futures closed up 0.1% overnight, and Malaysian palm oil futures closed up 0.1% on the session. Equity markets in Shanghai were strong overnight, and that action helped Hong Kong shares throw off some early weakness. Indian stocks were slightly weaker overnight, while European stocks this morning were unable to show much in the way of definitive direction. In early action today, US equity markets were simply waffling around both sides of unchanged. The US Dollar has started out weaker against the euro, but it was showing some gains versus the Canadian and Aussie Dollar. Overnight the markets saw generally favorable Euro zone economic readings in the form of strong German export figures, but the market also saw a German auction that effectively resulted in the German government being the benefactor of negative inflation-adjusted yields. In looking ahead, the markets will see a US Employment trends index, a Fed speech and US Consumer Credit readings. There is also a German/French meeting underway to discuss normalizing Euro zone fiscal rules. Deliveries for January soybeans were 131 contracts this morning (1,881 to date) with 0 meal (148 to date) and 631 oil delivered (5,305 to date). The forecast for this week for South America has not changed much, with 1/2 to 1 1/2 inches of rain expected across the dry areas of Argentina and southern Brazil with near 80-90% coverage. This may be a little less than expected from Friday. After weeks of dry weather, this is expected to save crops from dangerously dry conditions. However, follow-up rains will be necessary, and it appears that the weather trend is still drier than normal for the second half of the month. Temperatures over the weekend into the 90's and 100's could have caused further damage, and without a shift to a wetter pattern, traders see stress returning to the South American crops in a week or so after this week's rains. A weak dollar, strong gains for China equity markets and a more positive tilt to the global economy are seen as supportive forces today. Index funds are expected to be light buyers of soybeans and strong buyers of soybean oil this week as part of the rebalancing efforts. March soybeans closed 12 1/2 cents lower on the session Friday, and this left the market down 11 1/4 cents for the week. Weekly export sales for soybeans, in the report released before the open on Friday, came in well below trade expectations at 281,300 metric tonnes. Cumulative soybean sales stand at 68.2% of the USDA forecast for 2011/12 (current) marketing year versus a 5 year average of 73.2%. Meal sales were higher than expected at 144,400 metric tonnes, compared with sales of 97,000 metric tonnes needed each week to reach the USDA forecast. Oil sales came in at 7,300 metric tonnes. The break pushed the market down to new lows for the week. Talk of China buying US soybeans helped to provide underlying support, as did weather uncertainties for the South America outlook for the second half of the month. For the key USDA reports on Thursday, traders expect soybean production in the US to be revised higher by a few million bushels from the 3.046 billion reported last month. Ending stocks are expected to be revised higher by just a few million bushels, compared with 230 million in the last supply/demand update. Traders see December 1st stocks up 40-50 million bushels from the previous year. Stocks last year were 2.278 billion bushels. Traders will also be monitoring South American production estimates. The Commitments of Traders reports as of January 3rd showed non-commercial traders were net long 49,366 contracts, an increase of 10,831 for the week. The buying trend is seen as a short-term positive force. Commodity index traders held a net long position of 164,154 contracts, up 2,558. For Soybean meal, non-commercial traders were net short 18,212 contracts, a decrease of 467 contracts for the week. Non-commercial and nonreportable combined traders held a net short position of 16,338 contracts, down 1,763 contracts for the week, and the short-covering trend is seen as a short-term positive force. For soybean oil, non-commercial traders were net long 5,583 contracts, an increase of 9,695 contracts for the week. The buying trend plus the shift from net short to net long is seen as positive. Commodity index traders held a net long position of 87,078 contracts, down 3,090 for the week.