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NEAR-TERM MARKET FUNDAMENTALS: The soybean complex advanced above last week’s highs overnight despite mixed to slightly weaker outside market influences. Traders indicate that fears of an early frost may not be fully priced into the soybean market at this point, with this contributing to the recent strength along with last week’s buying by China. For now, weather forecasters are calling for a beneficial warm up in the Midwest to start the week with increased showers later in the week and a gradual cooling that may start late in the week and into next weekend. Cooling may become more pronounced by the end of next week, but there is no forecast of a frost at this point. The Commitments of Traders Report for the week ending August 18th showed substantial net selling by funds across the soybean complex. In soybeans, index funds were net sellers of 2,544 contracts while trend-following funds were net sellers of a large 21,879 contracts. This increased the trend-followers’ net long position to just over 45,000 contracts. In oil, index funds were net sellers of 1,676 while trend followers were net sellers of just 32 contracts. In meal, large non-commercial traders were net sellers of 7,190. China’s Ministry of Commerce expects China’s soybean imports to drop to 2.39 million tonnes in August compared to 3.83 million tonnes in August last year. They are expected to fall even further to 2.11 million tonnes in September which is down almost by half from last year. Chinese soybeans imports have been over 3 million tonnes every month this year through July. China imported 4.39 million tonnes in July, up 25.3% from last year. The USDA announced another sale of US soybeans to China on Friday, the 5th straight day that they have done so. The latest sale was for 233,000 tonnes and it was again for 2009/10 delivery. This brings total sales to China last week to 896,000 tonnes. Statistics Canada released its latest crop estimates on Friday. They pegged their canola crop at 9.54 million tonnes, down 24.5% from last year. Traders had been expecting a big drop, but the new total was about 1.0 million tonnes below trade estimates.

WEATHER: Weekend weather was mainly as expected – drier and cooler. Forecasters are expecting a warm up this week with increased shower activity that may start to usher in the next cooling period in the Midwest by late this week and into this weekend. More significant cooling is possible by the end of next week. There is still no killing frost in the forecasts despite intermittent cooling into the first week of September.

TODAY’S GUIDANCE: The lateness of the crop may be the overriding fundamental concern at this point and continued buying from China (896,000 tonnes last week alone) has added to the positive tone. US soybeans are still at considerable risk in the event of an early frost even though none is forecast at present. The fact that all elements of the complex along with corn and wheat are all moving higher suggests that the grain markets may still be oversold ahead of big upcoming harvest. First, light support is at 982 in the November contract this morning with the next support near 958 to 959. Resistance is at 1005 and again near 1030.

TODAY’S MARKET IDEAS: Selling resistance for November soybeans comes in at 1003 1/4 and then 1018 with 918 1/2 as next downside objective.

This content originated from – The Hightower Report.