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NEAR-TERM MARKET FUNDAMENTALS: Good weather for harvest in South America, speculative long liquidation selling and forecast for a hefty supply ahead has helped to pressure the market. Brazil supply officials from Conab pegged the Brazil soybean crop at a new record high 67.57 million tonnes this morning, up more than 10 million tonnes from last year and up from the latest USDA forecast of 66 million tonnes. Traders indicate that El Nino has caused palm production in Malaysia to be negatively impacted and that dry weather into the second quarter could also cause disruption in production. February production was thought to be down near 6% from last year. Big meal deliveries and talk of slow export demand helped to pressure the meal market overnight. Meal exports from India in February were just 218,748 tonnes, down 42.6% from last year and this pushed cumulative exports for the first five months of the marketing year to 1.3 million tonnes, down 43.4% from last year. The soybean complex started the week on a positive note with all three markets trading mostly higher throughout the day. Weekly soybean export inspections, however, were below trade expectations at just 30.9 million bushels. Cumulative inspections stand at 81.3% of the USDA’s export projection for 2009/10 versus a 5-year average of 69.1%. Still, inspections need to average just 10.1 million bushels each week to reach the USDA’s projection. Traders see higher crush and export numbers for Wednesday morning’s USDA update. Traders are looking for the USDA to lower its estimate of 2009/10 ending stocks to near 195 million bushels. Ending stocks were lowered to 210 million bushels in February from 245 the prior month. Argentina and Brazil are experiencing mostly dry conditions with scattered rains forecast into this week in southern growing areas of Argentina and in northern growing areas of Brazil. The rains in Brazil are expected to be light enough to cause only minimal harvest delays with about 1/3rd of the crop there already harvested.

TODAY’S GUIDANCE: The technical picture remains weak for meal and soybeans with the break under the February low for May meal leaving 250.80 as next downside objective. Selling resistance for July soybeans drops down to 954 3/4 and 962 1/2 with 893 as next objective. Use 881 3/4 as next objective for November soybeans with 929 1/4 and 933 1/4 as selling resistance.

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NEAR-TERM MARKET FUNDAMENTALS: May soybeans rallied as much as 64 cents off of the February 4th lows to this week’s high before seeing significant selling yesterday. Traders indicated that funds and producers were sellers and there remains a concern for the bulls that both South America and US producers become more aggressive sellers at the same time that demand begins to slow. Gulf basis levels slipped 2 cents yesterday but remain high for nearby shipment. Most of the new interest is on Brazil soybeans and traders expect a significant shift away from US origin in the weeks ahead. There are plenty of acres available for planting this coming season with the sharp decline in winter wheat plantings, but corn and wheat followed soybeans lower in January, so there is not too much advantage for producers to move away from a normal rotation. On the contrary, there are some producers who have moved away from a normal corn, soybean, corn rotation in recent years to a corn on corn and then soybean rotation, so that soybeans were grown just once every three years. This worked out well on paper for a few years when ethanol growth supported corn values, but high fertilizer costs and weaker corn values of the past few years may cause producers to shift back to a more traditional rotation. This could result in more active soybean plantings than expected this year. In addition, areas of traditional double-cropped wheat/soybean acres could end up with just one full season of soybeans this year, which would result in higher yields for soybeans. Traders said that the market largely ignored a slightly better than expected January crush rate estimate from the National Oilseed Processors’ Association (NOPA) who pegged the crush at 162.4 million bushels in January. Soy oil stocks were pegged at 2.695 billion pounds, about in line with trade expectations. Weather remains favorable for South American crops. If we assume that producers will plant 1 million more acres this spring and also assumed a slight reduction in both crush and export for the coming year due to the surge in available supply from South America, a trend-line yield at 43.4 bushels per acre could cause US ending stocks to swell to near 410 million bushels, up from 210 million this year and 138 million in 2008.

TODAY’S GUIDANCE: The market has recovered from an oversold condition and the current rally appears to be a selling opportunity.

TODAY’S MARKET IDEAS: Selling resistance for May soybeans is 974 3/4 with 935 1/2 and 932 as support. Keep 894 1/2 as downside objective. July meal selling resistance moves down to 277.20 with 266.90 as support. July oil support is near 38.98 with 40.38 as next resistance. Consider entering bear put spreads in July soybeans such as the July 970/880.

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NEAR-TERM MARKET FUNDAMENTALS: While soybean ending stocks came in a bit tighter than expected for yesterday’s USDA update, the market still faces higher supply ahead and record crop production from South America. South America weather seems to be improving and the Brazil government crop estimate for soybean production is up at 66.7 million tonnes as compared with the USDA at 66 million yesterday, 65 million in January and 63 million in December. All are record highs and compare with 57 million last year. Argentina production is expected at 53 million tonnes, up 21 million for last year. The surge in production could be one reason to suspect that total usage of soybeans in the US could slip lower for the 2010/2011 season. Even if we hold usage and planted acreage unchanged, a trendline yield for the coming season would likely push ending stocks higher. If we assume a 1 million acre increase and a slight reduction in export and crush (both numbers record highs in yesterday’s report) ending stocks could come in well above 325 million bushels. China imports of soybeans in January slipped to 4.08 million tonnes from a record 4.78 million in December. Traders believe that large imports and spreading pig disease led to lower crush margins or even negative crush margins for China crushers by the end of January. The USDA left domestic usage of soybean oil for bio-diesel production unchanged from last month in the February update at 2.2 billion pounds but many traders believe this could improve as the year progresses and increase for next crop season to near 3 billion as compared with total usage at 19.16 billion pounds. Oil again gained sharply on meal yesterday, taking that spread to the most extreme advantage for oil since May 2009 in terms of the contract value difference for the March futures contracts. Positive policy steps taken recently with regard to the bio-diesel mandate and Russia’s banning of poultry meat imports from the US are factors which may have supported the spread. The USDA lowered US soybean ending stocks to 210 million bushels from 245 million last month. Traders had been looking for number near 217 million. Exports were increased by 25 million bushels and the US crush was raised by 10 million. World soybean ending stocks were left near unchanged at 59.73 million tonnes, up 43% from last year and up to the second highest level in history. This pushes the world stocks/usage to 25.4% as compared with 18.7% last year and 23.1% the previous season.

TODAY’S GUIDANCE: We were hoping for a better bounce to sell.

TODAY’S MARKET IDEAS: Selling resistance for May soybeans moves down to 945 with 921 1/2 as first support. Use 894 1/2 as next downside objective. July Meal selling resistance is at 267.30 with 255.80 as next objective. Buying support for July oil is at 38.47 with 40.38 as next objective.

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NEAR-TERM MARKET FUNDAMENTALS: Trade reaction to the State of the Union address was somewhat positive for financial markets, and grain traders saw some relief from the bearish outside market forces overnight. However, there is still significant concern that the bank regulation reforms could in the long run spark increased volatility in the futures markets. Ideas that the market is in a short-term oversold condition and that reforms will not occur for months or longer have helped to provide some support. There are unverified rumors that China has switched two cargoes of US soybeans to South American origin and that there is one US cargo of soybeans under quarantine in China for quality concerns. On top of fears that bank trading restrictions could lead to futures volatility, China traders are concerned that the tightening credit situation there could lead to a near term slowdown in commodity demand and at least temporary pressure on many commodity markets. A strong US dollar, a weak Brazilian currency and talk of hedge funds shifting from a net long to a net short position in soybeans are factors which have helped to pressure the market. Argentina crushed 1.5 million tonnes of soybeans in December, compared with 2.26 million tonnes in November and 2.37 million in December 2008. March soybeans fell to their lowest level since October 8th yesterday with good volume noted. Growing conditions continue to be very favorable in Brazil with forecasts calling for an improvement over current hot and dry conditions in Argentina by the end of next week. Brazil is expecting scattered rains over the next several days, while Argentina may start getting scattered rains on Saturday and again to start next week. Indications of cooler and wetter weather in Argentina for later next week could ease stress concerns. The Census Bureau will issue its latest monthly crush data this morning. Traders are looking for the crush rate to be nearly 173 million bushels for December. Export sales will also be released this morning with expectations currently ranging up to 900,000 tonnes for soybeans, up to 300,000 tonnes for meal and 5,000 to 20,000 tonnes in soy oil. The outlook for surging soybean stocks for the coming year as record crops from the US, Brazil and Argentina move in to saturate demand has helped shift the psychology in the soybean complex.

TODAY’S GUIDANCE: Eventually, the market looks to end up with too much meal and a tightening supply of world vegetable oils. The market is in a short-term oversold condition, but rallies still look like selling opportunities. Selling resistance for May soybeans comes in at the 949 3/4 and 960 3/4 with 932 3/4 and 904 1/2 as next downside objectives. November soybean selling resistance is at 936 3/4 with 909 1/4 as next downside objective.

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NEAR-TERM MARKET FUNDAMENTALS: Improving crop conditions and ideas that the stronger US dollar could slow the export outlook has helped drive the market lower. The market remains in a steady downtrend moving to the lowest level since mid-November overnight on a continued expectation for higher crop production out of South America and expanding world and US soybean supply ahead. Funds were noted sellers again yesterday and a continued uptrend in open interest on the break is seen as a negative force. Old crop soybean contracts lost ground to the new crop contracts yesterday on ideas that soybeans might need to rally to maintain needed acreage this spring and/or ideas that there will be plenty of supply on the market by the spring if the weather remains favorable in South America. Traders again talked about private estimates that may hit 67 million tonnes in Brazil from the USDA January estimate of 65 million tonnes and from 63 million in December. Wet weather is expected to continue in parts of the soybean belt in Brazil which is generally considered beneficial, although this could cause some harvest delays in the north. Some analysts are crediting this year’s increased rainfall in Brazil to the presence of an El Nino effect in the Pacific. The USDA announced a sale of 100,000 tonnes of US soybeans to China yesterday but this move had little impact as traders see China shifting purchases to South America ahead. Weekly export inspections were 44.6 million bushels which pushed total cumulative shipments to 61.0% of the USDA’s projection for 2009/10 season versus a 5-year average of 49.3%. Inspections need to average 16.3 million bushels each week to reach the USDA’s projection. Taiwan is tendering to buy 40,000-60,000 tonnes of soybeans from the US or Brazil.

TODAY’S GUIDANCE: The trend has turned down and unless there is a weather glitch in South America like too much dryness in Argentina ahead, the market looks to remain in a downtrend. Selling resistance for May soybeans moves down to 977 1/4 and 980 3/4 with 932 3/4 and 904 1/2 as next downside objectives. November soybean selling resistance moves down to 949 1/2 with 924 and 909 1/4 as next downside objectives.

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NEAR-TERM MARKET FUNDAMENTALS: Cold and storming weather over the long weekend supported ideas that livestock feed usage is up and ideas that the tail end of harvest has been disrupted for corn and the corn rally helped support the soybean complex overnight. Traders see a bullish macro-economic view for the China economy and a positive world growth view as supportive forces for commodities in general and a weak tone to the US dollar and firm metals market added to the positive tone overnight. South America weather remains mostly a negative factor for the grain markets as Brazil and Argentina look to maintain favorable soil moisture conditions this week with scattered rains. The soybean marked closed lower on Thursday despite continued signs of strong demand from China but the market took out Thursday’s highs in the overnight session. The weekly export sales report showed stronger than expected sales in soybeans and oil and in line with expectations in meal. Net sales for soybeans were 1.369 million tonnes. Cumulative soybean sales stand at 84.3% of the USDA forecast for the entire season as compared with the 5 year average of 60.3%. Net meal sales came in at 254,200 tonnes which pushed cumulative sales to 62.9% of the USDA forecast versus a 5 year average of 41.7%. Net oil sales came in at 46,700 tonnes which pushed cumulative sales to 53.3% of the USDA forecast versus a 5 year average of 31.9%. Traders continue to await a shift in China demand away from US soybeans and toward South America new crop supply soon. Traders also anticipate the US government to extend the bio-diesel blenders tax credit in early 2010 and this has already been priced so anything different would likely impact the market. Traders seem to be raising their estimates for Brazil soybean production by 1-3 million tonnes above the December USDA forecast of a record 63 million tonnes.

TODAY’S GUIDANCE: The market is seeing an oversold technical bounce but the upside seems limited given the hefty supply outlook. March soybean selling resistance 1024 1/2 and more resistance at 1028 with 986 and 982 (50% of Oct-Dec rally) as next objectives. March meal looks to continue to push lower with 289.30 as next downside objective with resistance at 304.40. For traders who want to trade from the long side, March soybean oil support comes in at 38.74 and 38.49 with 39.48 and maybe 39.92 as near-term upside targets.

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NEAR-TERM MARKET FUNDAMENTALS: Strong demand from crushers and a weak US dollar were seen as the primary reasons that fund traders turned more aggressive buyers yesterday. The market continues to see a clash of short-term supportive demand fundamentals with the longer-term outlook (beginning February or March) for a surge higher in world production and increasing world soybean supply. Good weather in South America is seen as a negative force but demand continues to come in stronger than expected for US soybeans. The NOPA pegged the US November crush at record 160.3 million bushels versus expectations of near 156 million. This was up from 155.3 million bushels in October and up sharply from last year’s recession-reduced total of just 139.4 million bushels. Soy oil stocks as of the end of the month stood at 2.411 billion pounds, up from 2.286 billion last month. Ideas that there may be continued support from index fund buyers into early next year was seen as a supportive force. Funds were active buyers on the session for soybeans and meal and cash markets were steady with strong export and crush demand able to absorb the flow of farmer selling. Oil saw some selling pressure from China announcement that it would release rapeseed and soy oil into its domestic market in order to maintain supplies and keep prices stabilized. There was also willingness to release soybeans from reserves to help ease prices. Moisture levels have improved in Argentina recently with up to 1 inch of additional rain expected later in the week and into the start of the weekend in major growing areas seen as a factor to see improving conditions. Southern Brazil areas look to see periods of dryness into Friday which should allow for some increased harvest activity and allow wet planted areas to dry out which is seen as beneficial. An EPA spokeswoman indicated yesterday that the agency will issue final rules on revisions to the renewable fuel standards in early January.

TODAY’S GUIDANCE: We continue to believe that there is enough supply on the horizon to be able to turn the short-term trend down in soybeans but fund buyers continue to emerge on days of new China demand or on days of a weak US dollar. Perhaps the clear and decisive turn up in the dollar overnight will be seen as a negative force. March soybean resistance comes in at 1062 3/4 and a close above this level would suggest a continuation of the uptrend with 1105 as next upside target. However, a move back under 1056 and especially 1049 1/2 might be seen as bearish signals. For now, keep 1019 3/4 and 1004 3/4 as next downside targets.

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NEAR-TERM MARKET FUNDAMENTALS: The market saw a decent recovery to the upside yesterday despite weakness in other grains and mixed outside market signals. Traders are torn between the bullish news of strong upfront export sales for soybeans and products which might hold prices higher and the outlook for increasing US and world ending stocks for the coming season. While traders have talked that open interest might ease off into the end of the year, the open interest trend remains up. Since the November 10th USDA reports which showed expanding stocks for the 2009/10 season, open interest is up 62,313 contracts to 482,169. Argentina looks mostly dry with a few scattered rains early next week but conditions have improved due to recent rains. Brazil conditions look near ideal and even the southern wet areas look to dry out over the near-term. Dryness in Argentina could start to get problematic if it extends for more than a week. Statistics Canada estimated the 2009/10 canola crop 15% higher than their previous estimate at 11.8 million tonnes. This was about 1.0 million tonnes above trade expectations which was seen as a negative development. Weekly export sales for soybeans came in at 722,600 tonnes, below 1 million for the first time in one month as there are indications that China may slow purchases over the near-term. China has already booked more than 17 million tonnes of US soybeans for the season (which began on September 1st) as compared with the USDA estimate of total imports for the season to reach 40.5 million tonnes. The China National Grain and Oils Information Center has indicated that China imports in December and January alone will be near 9.6 million tonnes and that China could see reduced demand from crushers to book more imports anytime soon as buyers will be concentrating on booking South America soybeans for February and deferred shipment from now on. Cumulative soybean sales stand at 78.3% of the USDA forecast for 2009/2010 versus a 5 year average of 52.7%. Sales need to average just 193,000 tonnes each week to reach the USDA forecast. The Census Bureau released its latest US soy oil stocks report yesterday. Stocks as of the end of October stand at 2.723 billion pounds, down from 2.742 billion at the end of September. Oil used for methyl ester (bio-fuel) in October totaled 212.3 million pounds versus 205.8 million the month before.

TODAY’S GUIDANCE: The longer-term supply situation is still negative and the market is still under the negative technical influence of the December 1st reversal. If China demand slows, the market could see a significant setback. Look for good selling resistance for March soybeans at 1061 with 1035 as light support and then 1019 3/4 and 1004 3/4 as near-term downside targets. March meal selling resistance is near 309.30 with 294.90 as downside target.

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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.

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NEAR-TERM MARKET FUNDAMENTALS: Without help from outside markets, soybeans came under pressure overnight as the market resorted back to the outlook for good harvest weather this week and bearish news from the USDA this week which attracted new selling. Funds have been active buyers of soybeans and commodity markets in general recently with a declining US dollar and a very easy-money policy by the Fed helping to attract new investors. Solid gains in the US dollar appear to have turned the psychology more negative for those commodity markets which do not seem to have the fundamentals to move higher. For soybeans, the outlook for US ending stocks to increase by 95% to 270 million bushels and world soybean ending stocks to increase by 35% to 57.39 million tonnes has soured the price outlook. In addition, traders are not ruling out an even higher yield and higher production for the US as harvest weather has turned from near disastrous to near ideal. The USDA also reported record high production forecasts for Brazil and Argentina for the coming season for the crops which are just being put in the ground. There are still concerns with the dry pattern for key growing areas of Argentina but at this early stage, traders seem to be taking a wait-and-see attitude regarding the slow planting pace with planting progress near 33.8% complete as compared with 40.8% as normal. Argentina is expected to see some rain early next week although this could miss the very dry southern soybean belt there. Dry weather is expected in all areas until then which will increase the need for moisture, especially in the western and southern growing areas. Traders believe China buyers will slow down on purchases in the coming weeks, according to a survey of buyers from the China National Grain and Oils Information Center. China has already booked near 15 million tonnes of US soybeans and there is talk that they are booked through January. October soybean imports from China reached just 2.52 million tonnes which was down for the 4th month in a row and compares with peak of 4.7 million tonnes in June. Funds were noted as active buyers yesterday but there is a growing concern that funds could turn sellers if we go through a period of steady or higher trade in the US dollar. The latest weather forecasts call for increased rain in the Midwest from late in the weekend into early next week. The weather models overnight seem to be even wetter for early next week. Dry weather into the weekend should keep harvest active. Gulf basis was firm yesterday. The overnight deliveries against the November soybean futures contract were 222 contracts. Friday will be the last trading day for November soybean futures.

TODAY’S GUIDANCE: The market appears poised to push sharply lower “if” the fund buying spree slows and the focus shifts back to the soybean market fundamentals. A series of lower highs off of the October 23rd highs leaves the technical set-up a bit negative as well and a short period of a higher or even steady US dollar could spark aggressive selling from funds.

TODAY’S MARKET IDEAS: March soybean selling resistance comes in at 979 with 967 1/2 and 941 1/4 as next objectives. Use 905 1/2 as next downside target. January soybeans look set to test key support at 940 1/2 with 971 1/2 as close-in resistance. March Meal selling resistance is at 285.40 with 267.40 as next swing target.