July soybeans were trading 16 cents lower late in the overnight session. China futures closed down 0.5% overnight on talk of the government soon releasing soybeans from reserves of up to 3 million tonnes. Palm oil futures in Malaysia closed down 2.2% to a new 9-week low. Asian equity markets remained weak again last night with the Hong Kong market extending to a 7th straight loss. Weak retail sales figures from China rekindled hard landing fears again and that negative news was given added credence in the wake of disappointing Indian economic news overnight. European equity markets remained weak despite talk that Greece might be able to put together some form of government. However, the European markets were also off balance because of reports of rising protests against German leaders, which are being challenged in certain political sectors because of their hard line austerity stance. Early action in the US equity markets showed lower trade with the fear of slowing in Asia, turmoil in the Euro zone and ongoing disappointment with the pace of the US economy all pushing investors to the sidelines. The anticipation of slowing is becoming so entrenched that the trade probably expects to see a contraction in US inflation readings later this morning. There were 2 deliveries against May soybeans this morning, leaving the total this month at 2,538. Oil deliveries this morning were 308 contracts. There were no meal deliveries again, and there have been none for the month at all. A general sense that the world money managers are stepping away from commodity markets, a sense that the USDA report did not bring in any new bullish news to the table and more talk of a record spec net long position in soybeans and meal were all factors to help drive the market lower overnight. China weakness after the reports due to talk of significant reserve sales was also seen as a negative force. July and November soybeans closed sharply higher on the session yesterday but closed off of the early-in-the-day highs. The USDA confirmed a very tight outlook for the coming season. For the 2012/13 season, ending stocks are projected at just 145 million bushels which is 20 million below expectations and is the lowest May estimate since 1988. World ending stocks for the 2011/12 season came in at 53.2 million tonnes which was right on expectations and compares with 55.52 million last month and down from 70.1 million last year. Brazil production came in at 65 million, down from 66 million last month and Argentina was revised down to 42.5 million from 45 million last month. However, the Brazil agriculture ministry revised their crop estimate higher to 66.7 million tonnes from 65.6 as their previous forecast. The Rosario Grains Exchange pegged the Argentina crop at just 40.9 million tonnes from 43.1 as their previous estimate. India vegetable oil imports for April came in at 925,000 tonnes as compared with 727,000 in March and 475,000 last year. Weekly export sales for soybeans came in better than expected at 1.827 million tonnes. Old crop sales of 76,000 metric tonnes are needed each week to reach the USDA forecast. Meal sales came in at 235,500 tonnes and oil sales came in at 30,100 tonnes. Weakness in corn and the outlook for good weather in the Midwest were seen as negative forces.
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