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KLEIST CONSULTING
721 West Havens, Mitchell, South Dakota
800-234-2238

(March 14, 2002) SOYBEANS: AGAINST THE WIND?--As I write, the beans are extending a nice rally that basically started in early March. The funds have gone through an evolution of sorts from short to long and accumulating beans; adding to long meal; exiting heavy short oil positions. The market in a way is like water running uphill. Fundamentally, nothing that apparent is bullish. South America crops are perhaps not perfect but in the end look bountiful; U.S. export sales are starting to stay on the low side; China canceling some U.S. beans and replacing them with cheaper South American supplies; China's GMO restrictions still coming into effect on March 20th. Then why the rally? In part pure technical with the funds as mentioned above and with seasonal buy considerations for the commission houses. There might be one other reason the rally has not been challenged much, especially by the commercials: perhaps a last ditch attempt to buy back some acres from corn. Basis corn demand, corn can afford to lose some acres, the bean demand demands every one. With talk a month ago bean acres might increase 100,000 or decrease 100,000 on the year, the market did not like the decrease part. When this rally ends is arbitrary but the end certainly seems nearer. Without some new compelling fundamental news, May beans around $4.75 looks to be about it. Please refer daily advisories.

 

John W. Kleist

 

Farmers Trading Group

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