March soybeans were trading up 4 cents late in the overnight session. China futures closed down 0.5% this morning due to weakness in palm oil and talk of improving crops in South America. Malaysia palm oil futures closed down 0.1%. Asian equity markets were higher this morning, but stocks in Australia and New Zealand were a touch lower. European equity markets were higher and seemed to be poised to finish up a rather positive month of trade. The Euro zone jobless rate was unchanged at 10.4% for December, while the German January adjusted jobless rate reading showed a minor decline to 6.7% from 6.8%. In looking ahead to the US action today, the markets will be presented with a US employment cost index, Chicago ISM manufacturing and Consumer Confidence readings, with expectations calling for minor gains in both the ISM and Confidence reports. Most traders don't expect to see much in the way of inflationary pressures from the US employment cost index report this morning. Also due out during the session today, will be a private home price survey, which many analysts expect will show another minor decline in US home prices. While outside market forces support, the weather outlook and the slower than expected China demand outlook for early this week has helped to pressure the market. Rain in Brazil is expected to shift to the dry southern region by later this week and this should help ease stress. The dryness in the north should boost harvest progress and also boost ship loadings for export. Argentina crop conditions look to be improving as well with recent rains and more in the forecast. March soybeans closed sharply lower on the session yesterday and posted new lows late in the day. A more negative weather forecast for Argentina, ideas that northern Brazil will see a break from the rains to advance the harvest and bearish sentiment coming from outside market forces helped to drive the market sharply lower. The early selling pushed the market down to a six-session low and the market closed near the lows. Weekly export inspections came in at 41.5 million bushels which was well above trade expectations and compares with an average of 17.8 million necessary each week to reach the USDA estimate for the 2011/12 marketing year. There appears to be several rain systems for Argentina for the next few weeks and traders see crop conditions improving. The EU debt crisis is back as a negative macro force again this week and this added to the bearish tone. March soybean oil also closed sharply lower on the day and saw the lowest close since December 21st. Traders indicate that China port soybean inventory is still sitting at a historically high level of 6.8 million tonnes. This could ease China short-term demand for imports.
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