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NEAR-TERM MARKET FUNDAMENTALS: Traders say that yesterday’s late sell off in the soybean complex came on profit taking ahead of tomorrow morning’s USDA Supply/demand report. They add that lower equity and crude oil markets helped to get the selling started. Funds also moved to the sell side late yesterday after being buyers early in the session in soybeans. One analyst said that trade overnight fit with the general idea of repositioning ahead of the reports as the market started the session on a firm note, sold off during the night and recovered to end the overnight session with a late surge in old crop soybeans and meal. Traders are looking for another reduction in projected ending stocks for the 2008/09 marketing year on tomorrow’s Supply/Demand Report. Talk of Chinese buying in soybeans initially supported the soybean market yesterday, but traders realized by later in the day that this would likely be South American soybeans, and that China is likely to increase its commitment to South America supplies in a normal season shift that should continue into June or longer. US soybeans were more expensive at the Gulf than Brazilian soybeans, and that is also helping to tip the balance to South America according to cash traders along with the fact that harvest progress is advancing with few interruption in most growing areas of both Brazil and Argentina. Recent reports have suggested that selling by farmers in Brazil is behind the normal pace. No talks were scheduled by farmers and the government in Argentina as of early this morning. US weather has hit a dry patch in the Midwest which is expected to continue in most areas through tomorrow night.

WEATHER: Mostly dry conditions are expected in the Midwest through Saturday or longer with the exception of showers developing in the SW Midwest on Thursday night and spreading across the southern and central Midwest on Friday. Virtually all harvest areas in Argentina and Brazil are forecast to be mostly dry over the next few days.

TODAY’S GUIDANCE: The pause has turned into a setback in the soybean complex, but this should prove temporary. The late sell-off yesterday was sparked in large part by weakness in crude oil and equities and profit taking ahead of tomorrow’s Supply/Demand report. We may see more selling today in the absence of fresh direction from outside markets, but the market appears to be signaling that it wants soybeans to make further gains in the corn/soybean ratio which is a supportive sign for the longer term. Dry spells, even temporary and localized ones, will tend to delay the shift of acreage from corn into soybeans. First support is near 978 1/2 in the July contract. Better support is near 968. Resistance is near 988 and at 995.

This content originated from – The Hightower Report.