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China Reserve Rates Support Soybeans

China lowered reserve rates at their banks helping to boost liquidity and support a sputtering economy.

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In the overnight session corn is down 1 3/4 cents, soybeans are up 4 1/2 cents and wheat in Chicago is up 1 1/2 cents. The U.S dollar is trading nearly .5 percent higher this morning with crude oil down .75 percent. Over the weekend china’s central bank cut the reserve requirement by 100 basis points to 18.5 percent in an attempt to encourage bank lending to help revive economic growth. This is the second industry-wide cut in two months and frees upwards of a trillion yuan of liquidity.

Soybeans traded higher in the overnight session in response to lowered reserve requirement in China. With China importing roughly 60 percent of soybeans traded worldwide, news of increased liquidity and access to capital will impact the price of Soybeans in Chicago.

The plains saw beneficial rains over the weekend which should continue to weigh on wheat prices. More showers are possible on Tuesday and Wednesday and further precipitation is expected in the 6-10 day forecast. The crop conditions will be released today after the close. Analysts are expecting an overall increase in the good-to-excellent rating after widespread rains last weekend helped to lower the risk of crop damage to the winter wheat crop. Last week good to excellent ratings were at 42 percent, down from 44 percent the week earlier. Over the weekend Egypt’s GASC purchased 300,000 metric tons of French, Romanian and Russian wheat.

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