This article is brought to you by:
CONSENSUS

ALLENDALE, INC.
4506 Prime Parkway, McHenry, Illinois
800-262-7538

(March 8, 2002) SOYBEANS: Cash grain movement was very apparent this week as commercials continue to drop basis levels due to cash sales and the fact the world users of soybeans are switching their demand focus from the U.S. to the new harvest in South America. Our commercial sources say they are throwing the need switch at the Gulf from beans to corn. USDA threw a curve at the soybeans today when they increased soybean production in Brazil by a million tonnes when the trade anticipated 1 MMT decrease. The Chinese were able to reach an agreement with the USA on GMO imports, but timing couldn't be better to open a bigger door for the South American crop. USDA did leave export projections unchanged at 1.020 billion bushels as the pace of sales remain much more aggressive than last year and the five-year average. Even if USDA did increase South American soybean production the underlying larger story has to be the fact demand was also increased and has left stocks slightly less than last month. World demand remains strong. At a time when funds bail out on longs due to an impending South American harvest, technicals have grabbed their attention like a brass nose ring grabs a bull. The neckline was broken on the head and shoulders formation on Thursday. The broken neckline could project May futures to the 4994 level. We reached our long objective on Thursday as a result of our 10-year average study which suggested May futures rally an average 27 cents from the last day of February to the last day of trade in March. The study does suggest the trend is higher in the long run for the month of March. Thus we could be at a crossroads where technicals are taking over from bullish February demand. We will pick a spot to re-enter longs against what was old resistance which is now new support. We will keep risk tight just in case the fundamentals switch back on and favor that record Brazil soybean crop. With the possibility of running with the last year of the Freedom to Farm bill we would not expect a huge shift in planted acres when projections are release later this month. We will share historical acreage data with you next week. We plan on releasing our acreage estimates next Friday morning. When looking at the past ten years worth of weekly export sales data for the month end of February, the last time we had new crop soybean sales as large as were recorded for the period ending last month was in 1996. For the 2002/03 marketing year our cumulative export sales for soybeans are 360,000 tonnes. At the end of February in 1996 the cumulative export sales for the crop which was to begin harvest in the fall of 1996 were 504,435. Could it be world buyers may have as big a concern about the potential for drought this year as they did back in 1996 after the dry summer of 1995 or a little less?

 

Joe Victor

www.allendale-inc.com

Hosted by:
CONSENSUS, INC. AND INVESTORS CO-OP
P.O. Box 520526
Independence, MO 64052-0526
816-373-3700
Fax: 816-373-3701
editor@consensus-inc.com