January soybeans were trading down 1 1/6 cents late in the overnight session. China futures closed up slightly overnight led by an advance in corn. Malaysia palm oil futures were down 0.2% overnight. While equity markets in Asia were generally lower during overnight trading, stock indices in Europe are slightly higher this morning. Early indications are that the US markets will open with moderate gains. The US Dollar is slightly weaker against most of the major currencies. Japanese GDP during the third quarter was up 1.4%, higher than market forecasts. Chinese CPI during November was up 4.2% year-on-year, lower than expectations. The German Trade surplus during October was 12.6 billion Euros, lower than projections. Major US economic numbers to be released this morning include the US October International Trade Balance at 7:30 AM, and a private survey of Consumer Sentiment just before 9:00 AM. Meal deliveries this morning were 22 contracts for a total of 744 for the month while oil deliveries were 338 to push cumulative for the month to 9,645 contracts. The USDA supply/demand results for release ahead of the opening should dictate price direction today. Traders are looking for 2011/12 soybean ending stocks near 215 million bushels as compared with 195 million bushels from the November report and 160 million from the October report. Traders also see world ending stocks declining by about 500,000 tonnes from 63.56 million tonnes in the November report. The soybean market managed to shake off bearish outside market forces yesterday to close slightly higher on the day after a weak opening. A sharp break in metal and energy markets and weakness in the stock market plus a strong bounce in the US dollar helped to pressure early. While outside market forces were clearly negative, better than expected weekly export sales news and a dry forecast for South America were seen as positive forces. Net weekly export sales for soybeans came in at 770,400 metric tonnes for the current marketing year and 25,200 for the next marketing year for a total of 795,600 which was well above trade expectations. China was the most active buyer at 551,100 tonnes. Cumulative soybean sales stand at 61.2% of the USDA forecast for 2011/2012 (current) marketing year versus a 5 year average of 66.8%. Sales of 357,000 metric tonnes are needed each week to reach the USDA forecast. Meal sales came in at 170,000 metric tonnes which was about as expected and oil sales came in well above expectations at 18,500 metric tonnes with Morocco as the strongest buyer. Sales of 12,000 metric tonnes are needed each week to reach the USDA forecast. On top of dry weather concerns from South America, Brazil officials pegged the 2011/12 soybean crop at just 71.29 million tonnes which is down 5.4% from last year and below trade expectations. In the November USDA update, Brazil production was pegged at 75.00 million tonnes from 73.5 million in October. Traders remain concerned with the relatively dry weather pattern for the next 10 days or so for parts of southern Brazil and Argentina but weather models show more normal rains after 10 days. Traders will monitor this situation closely.
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