What Traders are Talking About:
* China PMI data -- bad outweighs the good. China's HSBC flash PMI improved to 47.8 this month from 47.6 in August, but the data signals China's manufacturing sector -- at least the smaller manufacturers -- continue to contract. If the preliminary data is confirmed when the final HSBC PMI data is released in early October, it would mark the eleventh consecutive month of contraction in China's manufacturing sector. There were some signs of the sector stabilizing, however, as the new export order sub-index didn't decline and several other sub-indexes, including new orders increased.
The long and short of it: Global markets reacted negatively to the Chinese data. While there are some glimmers of hope the worst may be behind, China's key manufacturing sector is still far from growing.
* Euro-zone flash PMI data also disappointing. The composite euro-zone flash PMI dropped to 45.9 this month from 46.3 in August. That's the lowest euro-zone composite PMI reading since June 2009. The business confidence component of the PMI dropped to 49.1 from 53.6 in August and the jobs component dropped to 46.3 compared to 47.5 last month. Those are the lowest readings since March 2009 and January 2010, respectively.
The long and short of it: After recent efforts by the ECB to boost economic activity, some were hoping for better economic data. But it's too early for the new stimulus measures to have taken hold and be reflected in this data.
* End-user buying picks up. There has been a flurry of export activity this week, signaling there's still solid demand under the corn, soybean and wheat markets. But major purchases have been lacking, suggesting end-users are waiting to see if prices will fall further before aggressively booking supplies. And China has been noticeably absent. While there was some chatter early this week that China may have booked a couple of cargoes of U.S. soybeans, nothing was confirmed.
The long and short of it: A very large purchase or China showing up as a buyer are needed to convince traders a short-term low is in place. Until either of those occur, there's risk of addition price pressure.
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