July soybeans were trading 6 cents lower late in the overnight session. China futures closed down 0.4% overnight and down for the 6th session in a row. Palm oil futures in Malaysia closed slightly higher. China shares overnight were mostly weaker with the focus of the anxiety mainly on the threat of debt problems in Spain and Italy. European equity markets were also weaker to start today, with many measures in that region poised to forge the biggest weekly loss in 6 months. A downgrade of Spanish Banks by Moody's and a two notch credit rating downgrade of Greece by Fitch wasn't that surprising, but that action seems to have rekindled speculation of a breakup of the Euro zone again. While US equities were at times trading in positive ground early this morning, an empty US scheduled report slate might leave the market's focus on Europe and the Facebook IPO. A turn to a little more positive outside market forces and another large China purchase are factors which might suggest that the recent break was enough to attract significant demand. Some uncertainties with the idea of bumper grain crops this summer also provided some support as areas of the delta and Midwest will need to go another week or more without rain and some areas received little rain in the past week. China futures remained under pressure this week due to plans to offer 600,000 tonnes of soybeans from state reserves next week which could help to slow the short-term import demand. Traders believe the country could sell near 2.5 million tonnes over the near-term. Keep in mind; the US ending stocks estimate is already tight using a fairly high yield and even a jump of 1.5 million acres from expectations in March would add just 60 million or so to the bottom line. July soybeans closed moderately higher yesterday led by continued strong gains in meal which moved to the highest level since May 2nd. More China buying of old crop soybeans and a little less pressure from outside market forces helped support strong buying support early with July soybeans already up as much as 74 cents from Monday's lows. Weekly sales were slow but a bulk of the sales were for old crop and this was seen as positive. On top of the weekly sales report, the USDA announced a sale of 480,000 tonnes of US soybeans to China for the 2011/12 season. Net weekly export sales for soybeans came in at 616,300 metric tonnes for the current marketing year and 57,100 for the next marketing year for a total of 673,400 which was well below trade expectations near 1.2 million tonnes. Old crop sales of only 42,000 metric tonnes are needed each week to reach the USDA forecast. Meal sales came in at 195,600 tonnes and oil sales came in at 48,100 metric tonnes which was well above estimates. Argentina officials pegged the 2011/12 soybean production at 41.5 million tonnes from 42.9 million as their previous estimate and compared with 42.5 million as the recent USDA forecast.
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