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(March 7, 2002) SOYBEANS: The lone bright spot in the USDA report is expected to be the beans, where traders expect to see ending stocks near 240-252 million bushels versus the February forecast for 270 million bushels. Keep in mind that like the wheat and beans, this has been talked about for a while. As is always the case, trade market action, not report numbers.

It should be noted that basis levels are slipping. This means that either demand is slipping or the rally in beans is bringing more beans to market. Either way, it is not a positive development. That said, I see this trade as mostly technically inspired, with a number of traders looking for a modestly friendly report on Friday.

News from Brazil is not so positive. Brazilian exports for 2001 rose by almost 35% to 15.5 MMT, and they expect another record year again this year. They expect exports to climb by another 10%. The USDA last forecast the Brazilian crop at 42.5 MMT versus last year's 37.2 MMT. The jump in exports was seen due to a record large crop and a declining Brazilian real against the dollar.

As has been the case, it appears that unless new demand or a weather problem crops up, traders should expect moves to be more modest. In other words, don't go looking for "beans in the teens." Be willing to protect and take profits.

M. Steven Morgan

www.commodityreview.com

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