NEAR-TERM MARKET FUNDAMENTALS: The emergence of heavy deliveries against the May soybean contract yesterday and more today combined with a move to a new one-year high in the US dollar are seen as negative forces. Cold and wet weather in the forecast and the need for some replanting in the southern Midwest region which was hit with flooding rains over the weekend should slow the planting progress next week but this week’s weekly update showed the crop off to a fast start. The weekly planting update showed 15% of the crop was planted as of Sunday compared to 5% last year. The 10 year average for this time of year is 9%. This matched the highest percent complete from 2000. The Argentina Agriculture Minister indicated that 67% of their soybean crop has been harvested so far. There are still no shipping delays from the Gulf of Mexico but traders will monitor the situation closely in the days ahead. With the high dollar and freshly harvested soybeans in South America, buyers don’t need much of a reason to switch to other sources. Brazil exported 4.913 million tonnes of soybeans in April which is up from 3.086 million tonnes in March and up from 4.493 million last year. Meal exports totaled 1.122 million tonnes from 1.148 million in March and 1.296 million last year and soyoil exports came in at 110,800 tonnes from 62,000 in March and 162,500 tonnes last year. A wetter pattern seems to be developing ahead but the year so far has seen just 5.6 inches of rain in Chicago as compared with 10.47 inches last year. In addition, the market faces a much colder than normal trend for late this week into next week. South Korea bought 100,000 tonnes of non-GMO soybeans for Jan-May 2011 delivery. This week’s export inspections for soybeans were 7.2 million bushels, just below the 7.9 million bushels that are needed each week to reach the USDA’s export forecast for 2009/10. This was the lowest weekly shipment number since September.

TODAY’S GUIDANCE: The market looks to come under increased selling pressure with a strong dollar, slowing exports, big deliveries and enormous crops just harvested in South America. Keep in mind, world ending stocks at the end of the 2009/10 season are expected to increase 47% from last year to 62.96 million tonnes. This is the second highest on record. Meal short-term demand still remains strong but this may ease soon. Technically, the market turned down last week with a closing price reversal, a penetration of the uptrend channel of the April rally and follow-through selling this week. The lowest close since mid-April could also attract increased technical selling.

TODAY’S MARKET IDEAS: July soybean selling resistance moves down to 997 3/4 with some light support at 981 3/4 and then 970 as next support. Use 958 1/4 as an additional key support level. July Meal selling resistance comes in at 289.10 with 282.60 and 278.20 as next objectives.

This content originated from - The Hightower Report.

NEAR-TERM MARKET FUNDAMENTALS: Weather forecasts are showing some divergence between warm temperatures over the short term and colder temperatures, and possibly a frost, in the 6-10 day timeframe. Some traders indicate that the soybean complex is taking its cues from the dollar and crude oil on a shorter term basis and the dollar was sharply lower overnight. Gold and other markets are also shows signs of nervousness over inflation, and traders say that this may be the underlying support factor this morning. This week’s Crop Progress report showed that 40% of the US soybean crop is now dropping leaves, a final stage in the maturation process. This is up substantially from just 17% last week. If this week’s weather is warm as is now being forecast, next week’s progress report should show a similar rapid advance. The condition of the soybean crop is rated at 67% good/excellent compared to 68% last week and 57% last year. The 10 year average for this time of year is 53%. The GFS weather model is showing an outbreak of cold air into the NW corn and soybean belts as early as next Monday. China’s minister of agriculture indicated yesterday that China did not plan to target US soybeans as part of its current trade row with the US over Chinese tire exports. However, he did not rule out the idea of trade sanctions at some point in the future. China imported just 3.13 million tonnes of soybean in August, down 29% from July and down from a record 4.7 million tonnes in June. August edible oil imports were 790,000 tonnes, down from 930,000 in July. Paraguay’s grain export chamber, or Capeco, said yesterday that the country’s soybean production may surge next year to 7 million tonnes. This compares to 3.4 million tonnes last year and the previous record of 6 million tonnes. Capeco expects the improvement to stem from increased acreage and a return to favorable crop weather.

TODAY’S GUIDANCE: The soybean complex is taking its cues from the dollar and other outside markets again today and that is leading it higher. However, the soybean crop advanced rapidly over the past week and more of the same can be expected this week. This remains the major price issue despite the possibility of frost in the northern or NW Midwest by the end of the month and into early October. With South American crops set to increase this fall and winter, in some cases sharply, the overall world supply outlook seems to reinforce the case for a break to well below the July lows. First support is near 903 to 905 in the November contract. Next support is near 881 1/4. First resistance is near 936 1/2 and then at 950 to 951.

This content originated from - The Hightower Report.