May soybeans were trading 10 cents higher late in the overnight session. China futures were up 0.4% overnight and closed higher for the 4th session in a row into the USDA reports. Palm oil futures in Malaysia overnight were up another 1.1% to a new 13-month high. Asian equity markets were mixed overnight, with the markets surprised by a positive Chinese Trade surplus reading. Apparently a pick-up in overseas demand countervailed slack domestic demand in China. The European markets were still generally off balance, because of last week's soft US payroll report and also because of residual slowing fears in China, in the wake of their monthly trade balance figures that showed a softening of domestic demand. From the US scheduled report front today, the market will see weekly private US chain store sales figures, US Wholesale trade and a flurry of Fed speeches throughout the trading session. Also due out today are the results of a US 3 Year Note auction at mid day and traders will also see a US and World Agriculture Supply and Demand report ahead of the opening. The results of the report will set the tone for the market today. The new 7-month high and lower close yesterday suggested some profit-taking into the report after a $3.31 (29.7%) rally in just four months. After making a minor new high for the move early yesterday, the May soybean market fell back in what many suggested was a profit taking or position balancing reaction ahead of the USDA reports. The November soybeans forged an even wider range, suggesting that the difference in opinion between old and new crop soybean markets remains rather significant and November is showing resistance just under 1400. US soybean export inspections were seen at 26.39 million bushels from 29.5 million last week and that compares to estimates of 24 to 28 million. Perhaps the soybean market was also seeing some pressure from the prospect of precipitation in the southern US for later this week. As in other physical commodity markets, weakness in equities and adverse currency market action could have been an excuse to bank some long profits in soybeans ahead of a critical junction. The focus of attention for the USDA reports this morning is on the extent of further losses to South America crop production due to weather. Traders see better demand for US soybeans due to these losses and ending stocks for the 2011/12 season are expected to slip to near 245 million bushels from 275 million last month. Both export and crush numbers are expected to be revised higher. New crop supply/demand will not be released until next month. Traders see Brazil production near 67 million tonnes and Argentina near 45.2 million.
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