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(March 1, 2002) SOYBEANS: when looking at May soybean futures performance in the month of March over the past ten years, history tells us the odds have favored the long side. Specifically the study suggest if you had bought May soybean futures at the close of business of February, then at the close of business of March, 6 out of ten times you would have had an average gain of 10 cents. The four years the month closed lower it was by an average of nearly 11 cents. Over the past ten years when May futures rallied during the month of March it was for an average of 27 cents with the maximum rally at 74 cents in 1997 with the smallest rally of 11 cents on in 1996. During the month of March when futures sold off it was by an average of 11 cents with the biggest sell off of 31 cents in 1996 and the smallest sell off of a half cent in 1999. We were long one unit of May soybean futures and used an objective which was reached on Wednesday's rally and then re-bought against long-term trend line support on Thursday sell off. Our three-year average November soybean study suggest futures have traded in a 4910 to 5000 trade range through the beginning of May. Brazil's record soybean production could end as bearish to our futures as bullish is the news from Argentina of export taxes and continue weak domestic and foreign consumer confidence. The market would like us to fret over the exposure of 275 K tonnes (10.1 million bushels) of sold yet unshipped soybeans to China. We would rather conclude a increase tightening soybean end stock supply due to export shipments of 20.2 million tonnes thus far this year versus 17.3 MT a year ago the same time. Or better yet ask the trade why in this latest Weekly Export Sales and Shipments report was China a fresh buyer of 119 K tonnes of soybeans and equal amount of shipments. While the trade and news wires want to sell the public on talk of China's fearful GMO March 20th deadline when they will ask for GMO safety certificates to be filed we will continue to cite year on year soybean crush and potential world record demand which is challenged to handle world record production and leave ending stocks and stocks to use very near year-ago levels. Does the trade honestly expect us to swallow all of their guesswork. Do they believe China will close their crushing units down and curd the country's insatiable appetite for soybeans, meal, and oil? We believe the trade needs to read the facts. Traders perception is expected to be the main focus as we start out the first full week of March trade beginning Monday. Possibly another day of tight deliveries, Chinese rumors and talk of commercials buying barge freight and potentially seeking March futures delivery shipping certificate purchases can keep futures moving to our long May futures objective.

 

Joe Victor
www.allendale-inc.com

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