Pre-Opening Soy Complex Market Report

January soybeans were trading 8 1/4 cents higher late in the overnight session. China futures closed higher for the third session in a row, up 0.6% overnight, and Malaysian palm oil futures closed down 2.7% on the session, as first half palm exports were down 16.6%. Some equity markets in Asia were lower for the eighth straight session overnight. Stocks in Europe showed some minor strength to start the Thursday trade. Early indications are that the US markets will open with minimal gains. The US Dollar was slightly weaker against most of the major currencies. In the overnight action the markets saw signs that the UK economy continues to weaken, with November UK retail sales coming in softer than most expectations. The Euro zone posted declining inflation and declining employment figures. The Euro zone also posted lower December services PMI readings overnight, but those figures weren't as bad as some expectations. Major US economic data to be released this morning, includes initial and ongoing claims, an Empire state manufacturing report, Industrial production, Capacity Utilization and a Philly Fed Business outlook survey. China PMI is still under 50% but showed some improvement against last month. A calmer tone to financial markets might allow grains to focus more on South America weather today. Without a fear of a meltdown in Europe, soybeans may see support today from a continued drier than normal forecast for Argentina and southern Brazil for the rest of the month. Traders see a chance of some rains late next week but still below normal and there is talk that Argentina may end up with about 30% of normal precipitation for the month. Short-term demand indications for US soybeans are weak, however, with poor crush markets and sluggish export demand. Traders see weekly export sales for release this morning near 500,000 tonnes for soybeans, near 100,000 for meal and near 7,500 tonnes for oil. The NOPA crush report for November showed soybeans crushed at 141.277 million bushels as compared with trade expectations near 142.5 to 143.0 million. October crush was 141.2 million and November of last year was 148.8 million bushels so the report was considered negative showing sluggish crush demand. Soybean oil stocks came in at 1.876 billion pounds as compared with 1.876 billion last month and 2.83 billion last year. Stocks were a little below expectations but this did not stop the selling for soybean oil yesterday and January oil closed sharply lower and pushed to the lowest level since October of 2010. January soybeans closed sharply lower on the session yesterday as fears of a drop in global demand for commodity markets in general contributed to the selling. Even more talk of a dry forecast for Argentina for the next week failed to provide much support. The early break pushed the market to the lowest level since October of 2010. Bearish outside market forces, a collapse in gold and silver plus a sharp drop in energy markets helped spark aggressive selling from fund traders and a move to new lows. Euro debt concerns have many managers expecting deflation and a "risk liquidation" tone helped spark aggressive selling in a wide range of commodity markets. South Korea bought 100,000 tonnes of non-GMO soybeans. The weekly broiler report showed eggs set down 5% from last year with placements down 3%. Brazil is threatening to reverse the tax credit set-up for crushers but many traders seem to believe the credits will be restored soon. If not, Brazil would likely be a much more active seller of soybeans on the world market and crushing would drop significantly.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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