July soybeans were trading 9 1/2 cents lower near 7:30 cst. China futures closed down 0.3% and Palm oil futures in Malaysia closed near unchanged. Chinese stocks were weaker again overnight, with some measures posting the biggest weekly losses in six months. Apparently investors and traders in China took the surprise Chinese rate cut as a sign that more negative economic news will be seen directly ahead. European equities were also weaker overnight, as the trade remains concerned over the situation in Spain, especially after a credit ratings change overnight. Rumors are now suggesting that Spain will make a formal request this weekend for more funds. Early US equity market action is also weaker again, as trouble in the Euro zone, residual slowing fears from the US and a lack of definitive direction from the Fed this week has left investors unsettled. However, with another Fed member suggesting that the US was in need of additional easing, a portion of the negative international economic vibe was tamped down. On the other hand, the US economic report slate today is somewhat thin with Trade Balance and a wholesale trade figures due out. Therefore, the focus of the markets might remain on Spain and their potential weekend request for funds. The surge higher this week leaves soybeans a bit overbought and the soil dryness leaves the rain event for early next week as a very important force. Outside market forces are clearly negative today with a surge higher in the dollar and bonds as a warning of a flight to safety. The US drought monitor shows some severe drought moving into southern Illinois with moderate drought developing in parts of Iowa, Missouri and Illinois. With tight stocks expected ahead, traders are hoping to see a jump in planted area from the March USDA estimate as an important source of supply. This may be difficult to see given the better returns for corn and the dryness in Kansas and surrounding areas where traders were hoping to see significant double-crop soybean acres. July soybeans closed sharply higher yesterday as a China interest rate cut, positive outside market forces and questionable weather helped to spark aggressive fund buying. The buying continued for much of the day in spite of a sharp break in gold and a recovery in the US dollar. Ideas that the weather forecast is a bit more threatening plus an outlook for tightening ending stocks for the supply/demand update next week helped to support. Traders see a drop of near 20 million bushels for ending stocks for the 2011/12 season from 210 million last month with many traders looking for a sharper drop. For new crop, traders appear hesitant to revise estimates much lower than last month's 145 million bushel carryout estimate which is already extremely tight. The China National Grains and Oils Information Centre believes that soybean imports could top 12 million tonnes for May and June and the group is maintaining their import estimate for the year at 58 million tonnes as compared with the current USDA estimate of 56 million. Strength in meal was again the leader to the upside with December meal rallying to just shy of the May contract highs into the close. Soybean weekly export sales were well below trade expectations. Palm oil production for May is expected to have increased about 8% to 1.38 million tonnes and the market remains at a stiff discount to US and Argentina soybean oil. With a slow start to the monsoons, traders may be monitoring India meal exports over the near-term. Soybean registrations were down 33 contracts for a total of only 10.