Soybeans ended limit down (50 cents lower) across the board yesterday as the markets continue to go through a long liquidation phase. Funds continue to cut their positions due to uncertainties in equities. The contradiction between fundamentals and the negative financial environment continues. Traders say the fundamentals have not changed and we still see good global demand for all veg oil products but fund liquidation forced by shrinking credit lines is clearly leading the market lower. Volume on Monday was extremely light more than likely due to the limit down conditions 61,579 Soybeans, 29,106 Soybean Oil and 53,491 Meal. Funds sold an estimated 3,500 Soybeans, 2,000 Oil and 2,000 Meal.

Early Opening calls are sharply lower. The Fed meets today and expectations are for a ¾ to full point rate cut as an attempt to calm fears about the US Economy. The liquidation phase is expected to continue as traders try to preserve capitol in this liquidation phase. Talk today of China trying to back out of some Soybean Oil and Palm Oil purchases. Argentina’s grain port of Rosario was shut down for the third straight day due to a farmers strike. Farmers are stopping grain sales to protest a sliding scale of export taxes on grain and oilseed products. Brazilian soy producers report harvest of 33% of the expected 59 mil mt by March 14th. this is behind the 41% harvested by this time last year. Malaysian Palm oil futures plummeted overnight down 10%. Chinese Soybeans, Meal and Oil futures all closed lower.

Early Opening Calls: Soybeans 30-40 cents lower, Meal $3.00 to $5.00 Lower and Oil $1.50 to $ 2.00 lower.

Top News -- Celeres says Brazil's 07/08 Soybean crop is 61% forward sold in latest week, up just 1% pt from the prior week, but well ahead of same time year ago when only 48% of the crop had been forward sold. -- Celeres says the Brazilian Soybean harvest is 33% complete, but is behind the 41% seen in same week year ago, but is above the longer term average harvest pace of 25% complete. -- Argentine grain exchange weekly progress report shows 1% of Soybean harvest is complete, just off from year ago 1.8% complete, they also reported average yield of 2.6 mt/ha & kept their production forecast at 47 mln mt. -- Soymeal & sunseed meal export tariffs have been modified by Argentine gov't. Last week the gov't said soymeal would be charged at 3% pts below unprocessed & exported grains, while sunseed meal would be 2% pt below; the gov't has now said both meals would be taxed at 4% pts below the unprocessed & exported grains. -- Commercial biodiesel blending requirements raised to 3% beginning July 1 from the current blend of 2% in Brazil, after the gov't passed legislation. The 3% rate is estimated to raise consumption to 1.2 Bln liters vs the 800 mln liter under 2% blend -- Texas soybean crop is 2% planted ahead of 1% pace seen in same week year ago. -- Oklahoma Seedbed preparations for most row crops were still running well ahead of normal with sorghum at 19% and soybeans at 27 percent. -- Monday's Weekly Soybean Inspections: 23.973 mln bu; expected 25.0 mln bu -- India halts all vegoil exports for 12 months, beginning Mar 17th, in an effort to help improve domestic stocks. But analysts note they export very little overseas & thus unlikely to have much impact either domestically or in global export markets. -- March 1-15 palm oil exports from Malaysia were pegged at 664,446 mt up 10% from the same Feb period when exports totaled 603,390 mt, acc. to Intertek shipping analyst -- SGS reported Malaysian palm oil exports totaled 675,013 mt in the Mar 1-15 period up 9% from the same period in the prior month -- Dalian Sept Soybean futures were 199 yuan lower; Sept Soyoil futures were again limit down dropping 460 to 11,040 yuan/mt; Soymeal for Sept delivery was 134 lower to 3,299 yuan/mt ($1=7.08 yuan) -- Malaysia's palm oil futures fell to 5 week lows, dropping on Tuesday 6% basis the June futures contract. -- Globex Soybean Vol. 45,630; Pit Vol. 13,029; Open Interest Change: -2,079 -- Weather: 6-10 Day Forecast: Normal to Below Temps. Normal to Below Precip. The Corn Belt will see rain, snow and thunderstorms today ending in the east Wednesday. Thursday looks dry. Friday will see light showers return. -- Outside markets: Energy Complex +2.61 $108.29; Gold & Silver: +9.3 at $1012.3 & +0.209 at $20.495; US $ is better vs. Yen & is lower vs. Euro

Cash Markets -- CIF Soybeans steady weak . FH Mar. +5 to +??, Mar. -2 to +5, Apr. -3 to +5, May +10 to +20, June +12 to +20, July +12 to +20, Sept. Opt. to +15, Oct. -2 to +10, Nov. +5 to +20

Nate Smith SMS Brokerage nsmith@jerrygulke.com toll free: (877) 787-6278 local: (312) 896-2090 fax: (312) 896-2052

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