March soybeans were trading up 7 1/2 cents late in the overnight session. China futures closed up 1.6% this morning with support from positive economic news. Asian equity markets were weaker this morning, as news of a better than expected Chinese PMI result wasn't enough to lift shares in that region. However, many economists are suggesting that the Chinese PMI readings reduce the threat of a hard landing in the Chinese economy and that could be a beneficial development for physical commodity markets. European economic data was a mixed bag overnight, with German manufacturing strong and French manufacturing readings a touch weaker. However, European equities were able to extend recent gains overnight, with some positive leadership seen from Financial and bank sector issues. At least in the early action today US equities were showing positive action, but that action could be tested in the wake of a private jobs survey release from ADP. Expectations for the ADP report are for a gain markedly larger than the anticipated gains for the Friday official US number. The market will also be presented with a January ISM Manufacturing PMI and a Construction Spending reading, both of which are expected to post modest gains. A mixed global weather view along with a more positive tone from outside market forces has helped to support solid gains in soybeans overnight and yesterday. A severe cold weather threat for Eastern Europe and Black Sea region rapeseed plus continued dry weather for parts of southern Brazil which could keep crops in a stressful condition have helped to offset the much improved weather situation in Argentina. The increased flow of fund trader buying has been a supportive force lately and news from China overnight may be seen as positive for commodity markets in general. Trend-following fund traders (non-commercial less index funds) were long just 25,071 contracts as of January 24th and this group was net long near 150,000 contracts in the fall. Non-commercial traders were net long 180,000 in the fall and are now net long just 61,661 contracts. March soybeans saw a late buying binge to push the market up to the highs and back up over 1200 into the close yesterday. The early bounce was led by positive signals from outside markets and from talk that Monday's sell-off was a bit overdone. Traders see weather in South America as a negative force. The jump in open interest of 15,120 contracts on the break Monday suggests that some traders are building a net short position. Private forecasts for lower South America production helped to provide some underlying support with one main oilseeds firm adjusting South America production down by 4 million tonnes.
Join the Discussion