July soybeans were trading 1 3/4 cents lower late in the overnight session. China futures were down 0.7% overnight. Palm oil futures in Malaysia closed down 0.3% overnight. Equity markets in Asia were mostly higher overnight, with Shanghai stock prices closing minimally weaker. European markets were a little higher to start, but then gave ground and ended up with a mixed to lower trade. The US stock markets were showing minimally positive early action today, as the equity markets continue to draft somewhat positively off the recent statements from the Fed. The US economic report slate today is rather active, with Initial and Ongoing claims, a Chicago National Activity index and pending home sales figures. Initial claims are expected to show some minor declines and that could be something that adds to the minimal initial risk-on vibe that seems to have been put in place by the US Fed yesterday. The market closed on a weak note yesterday and remains in an extremely overbought condition basis the COT reports, traditional technical indicators and near record open interest. Relative strength indicators show significant divergence on the rally and suggest a loss of upside momentum soon. July soybeans closed 11 cents higher on the session yesterday and to a new high close but closed more than 20 cents off of the early highs. Weakness in the other grains and ideas that the market is overbought helped to spark the long liquidation selling to pull the market off of the highs. Rumors of China buying more US soybeans and continued talk of declining production estimates for South America, especially Argentina, helped to drive the market sharply higher. The rally pushed nearby soybean futures to the highest level since July of 2008. Nearby meal has led the market higher, pushing to the highest level since July of 2009. There are rumors that China bought near 1 million tonnes of soybeans with a mix of old and new crop. Cash basis levels at the gulf remain firm as producer selling has been light even after the recent surge in prices. A turn lower in corn and wheat helped drag the market well off of the early highs. The weekly hatchery report showed that eggs set in the past week were down 4.5% from last year. This leaves a sluggish domestic meal outlook into the early summer. For the weekly export sales report, traders see soybean sales near 1.1 million tonnes from 1.219 million last week.
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