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NEAR-TERM MARKET FUNDAMENTALS: The July soybean contract made a new high for the move early in the overnight session, but a subsequent rally in the dollar brought selling pressure to both old and new crop soybean contracts as well as soybean oil. Traders indicate that the soybean market is trying to adjust to trends in the dollar, variable US weather, a changing supply and demand outlook in the Chinese soybean market and a USDA Supply/Demand Report later this week. That report is expected to show a small drop in 2008/09 ending stocks for soybeans, although one analyst said that last week’s cancellation of soybean sales by China may convince the USDA to hold the line on ending stocks at 130 million bushels for the time being. Stocks are expected to be down as much as 20 million bushels for 2009/10. The Commitments of Traders for the week ending June 2nd showed substantial fund buying in oil, but mixed trade with only minor net changes in oil. In soybeans, index funds were net buyers of 1,449 contracts while trend-following funds were net sellers of just 840. In oil, index funds were net buyers of 3,812 contracts while the trend-followers were net buyers of 7,285 to increase their net long position to nearly 10,000 contracts. In meal, large non-commercial traders were net buyers of 4,250 contracts to increase their net long position to 57,528. Traders in Malaysia are also waiting for a major report on Wednesday that is expected to show another drop in ending stocks for crude palm oil in May. This could push CPO stocks to near a 2-year low, but demand numbers are expected to be weak, and that helped to push palm oil lower by as much as 2.6% overnight.

WEATHER: The past three days saw showers and thunderstorms across Minnesota, Iowa, Wisconsin and northern Illinois. Amounts were from 1/4 to 1 1/4 inches. Other areas of the corn and soybean belt saw scattered showers to mostly dry conditions. Showers and thunderstorms are expected again in the NW and northern corn and soybean belt today as well as in Missouri with amounts of generally up to 1 inch. This system is expected to migrate mostly south and east over the course of the week bringing scattered showers. However, Friday through Sunday should bring a welcome dry spell to much of the Midwest. Rains are expected in the NE half of North Dakota, slowing planting progress in the NE quadrant of that state where farmers are doing the latest planting of spring wheat. After that, dry weather is expected through the end of the weekend.

TODAY’S GUIDANCE: The fact that the July/Nov spread traded back near the May 19th high in the spread overnight and this is a positive price indicator. So is the continued strength of meal versus oil and the fact that July soybeans moved to the highest level since September overnight. The dollar will bring some selling pressure if it continues to move higher, but nearby soybeans have adjusted well to the recent surge in the dollar as well as a flurry of sales cancellations by China. First support remains at 1200 3/4 in the July contract. The next support is at 1182 and 1169. Resistance is at 1239 3/4 and at 1260.

This content originated from – The Hightower Report.
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