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January soybeans were 2 cents lower overnight. Palm oil in Malaysia finished slightly lower today after recovering some of its early losses. Crude oil made another minor new low overnight before recovering slightly. The dollar was lower.
NEAR-TERM MARKET FUNDAMENTALS: The soybean complex broke sharply yesterday with January soybeans and meal capping off the day with new lows for the session just prior to the close. Funds were sellers in the complex. Selling continued overnight with January soybeans and soybean oil taking out their October lows. Soybeans recovered from those new lows to finish marginally lower overnight while oil finished marginally higher. Traders are looking at the sharp selloff yesterday in stocks as an indicator of possible further erosion in demand for meal. This follows recent weak numbers on the Broiler Hatcheries Report which is considered a good short term indicator of shifts in US feed demand. Export sales were above trade expectations on yesterday’s USDA report with China continuing to be the featured buyer in soybeans. Meal and oil sales were also considered positive, although they were in line with expectations. Net sales for soybeans were 790,900 tonnes. Cumulative sales stand at 59.1% of the USDA forecast for 2008/2009 versus a 5 year average of 55.1%. Sales were well above the 272,000 needed each week to reach the USDA forecast. Net meal sales came in at 92,300 tonnes. Cuba was the best buyer. Cumulative meal sales stand at 34.2% of the USDA forecast for 2008/2009 versus a 5 year average of 39.1%. Net oil sales were 7,900 metric tonnes. Sales need to average 19,000 tonnes each week to reach the USDA forecast.
CASH NEWS AND TENDERS: The Philippines bought a total of 68,450 tonnes of meal. The bulk of this was from Argentina and the rest from India. Iran is in the market for up to 25,000 tonnes of soy oil and up to 20,000 tonnes of sun oil. India is in the market to buy 26,500 tonnes of edible oils by mid-November.
WEATHER: Forecasts in South America are mainly the same. Dry conditions are starting to cause some concern in Rio Grande do Sul in Brazil and stressful dryness persists in central growing areas of Argentina.
TODAYS GUIDANCE: Reports in the market yesterday that China may sharply increase the size of a proposed reserve of domestic soybeans beyond the 1.5 million tonnes that was recently announced. The fact that soybeans staged a very marginal rally along with a lower dollar this morning suggests that further selling may still be coming. Support today is at 833 in the January contract. This may only hold for the short term. Resistance is near 872.
