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NEAR-TERM MARKET FUNDAMENTALS: The soybean complex remained under substantial pressure overnight following yesterday’s swift collapse from an early rally. Soybeans and meal remain the leaders to the downside and funds appear to be consistently interested in selling according to one trader. Traders said that the continued weakness overnight may have been triggered in part by China’s announcement that they will begin selling 500,000 tonnes of soybeans from their strategic reserve. China has accumulated 6 million tonnes of soybeans as compared with production from last year near 16.5 million tonnes. They appear interested in continuing to buy US soybeans on breaks and selling their own reserves at higher levels. Favorable crop weather in the US remains a major drag on soybean prices according to traders and analysts despite some lingering dryness in the Delta. Dry canola-growing areas in the western Canadian Prairie have gotten much needed rains over the past week and this has helped to relieve stress to the crop there. However, the Canola Council indicates that further rains are still needed. Eastern growing areas face the opposite problem and more rain there would add to moisture stress. Weather in the US remains favorable with moderate temperatures expected through the weekend along with sunny skies. There is some potentially worrisome dryness developing in Ohio and in the central and western Delta, although the longer term forecast calls for more rain in the eastern Midwest.

WEATHER: The storm pattern that moved across parts of the northern and south central Midwest yesterday is shifting to the south today. This may bring some needed rain to the western and central Delta by tomorrow with some additional rains there by Sunday. Dry, sunny weather is expected prevail in most of the Midwest through the weekend with showers moving into the western Midwest during the first half of next week. The very hot air system that has dominated the southern Plains is expanding and shifting to the west as predicted.

TODAY’S GUIDANCE: The soybean market pushed through the high end of the past week’s trading range yesterday and then collapsed. Today, it looks poised to push through the low end of that range. Odds are that the push to the downside will be more extended and the market looks poised for a run at 850 in the November soybeans. At this point, this early in the growing season the market may get too oversold. The pattern in soybeans and meal over the past month has been one of quick pushes into new lows followed just as quickly by a recovery rally. We would put the next significant support, as well as our near-term downside objective near 850 in the November contract. First resistance is at 911 1/2 and then at 916 to 918.

TODAY’S MARKET IDEAS: Despite the selling by China, and the likelihood that the trend will remain lower in coming weeks, we are wary about bear traps on the way down.

This content originated from – The Hightower Report.