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NEAR-TERM MARKET FUNDAMENTALS: News of potential debt problems for Dubai and the possible chain reaction through the global economy helped spark the sharply lower trade in soybeans and other key commodity markets overnight. A survey from the China National Grains and Oils Information Centre indicates that China import demand is likely to slow over the near-term as the market absorbs big US supply flow for the next several months. On the other hand, there is also news out of China that the country will start stockpiling soybeans purchased from producers beginning December 1st and lasting through April. This is a similar program to last year and China will pay producers 1% higher than last year to secure inventory. In addition, the European Union is expected to approve the import of GMO’s in the next few days which could cause a resumption of large-scale imports of US soybeans and meal as early as December. European buying may help offset some of the slowdown in China buying of US soybeans as traders believe China has already booked US soybeans through March and future needs would be met by South America. The soybean market saw rollercoaster action on Wednesday amid light volume. Prices moved higher in conjunction with new lows for the year in the dollar and a new all-time high in gold. Funds were buyers in soybeans and traders said that inter-commodity spreading between soybeans and corn and between meal and oil continued to be major features on the holiday-shortened week. The Census Bureau released its October crush report Wednesday and was in line with expectations at 163.06 million bushels. Oil stocks were below expectations at 2.727 billion pounds which may have helped support the oil market while meal stocks were above expectations at 444,940 short tons which may have helped pressure meal to lower on the day into the close. Weather continues to be wet in South America from eastern Argentina through the southern Brazilian state of Rio Grande do Sul. Forecasters indicate that this is in line with a typical El Nino Pattern. Vietnam bought 20,000 tonnes of South American meal for January shipment. Weekly export sales will be released this morning.
TODAY’S GUIDANCE: The soybean market needs to absorb very negative outside market influences and is still operating under the negative technical influence of the November 23rd reversal. The market is overbought and July soybeans face a burdensome supply ahead. Aggressive short-term traders could look at selling July soybeans at the 1056-1059 zone with 1031 1/2 and 1018 1/4 as support. May oil selling resistance is near 41.10 with 39.50 and 38.98 support. For May Meal, selling resistance comes in near 300.20 and again at 302.80 with 291.20 and 287.30 as next targets.
