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(March 20, 2002) SOYBEANS: Wednesday's sell-off took the beans to within a whisker of the 20-day average before they rallied, and considering action otherwise, it appears that another try at getting below it is in the near future. The chart is becoming increasingly negative. The question is whether or not this is just a pullback or just a pause in a larger move higher. A fair case can be made for either. World demand is strong, and record supplies are needed to meet that demand. That 's the bullish case in a nutshell, with the potential for a weather problem in the background. On the negative side, a record crop is being harvested in Brazil, China is a no-show on new purchases, and U.S. beans are higher than Brazilian beans. There is also talk that China may retaliate against the 30% steel tariff by imposing a tariff on U.S. soy products. The recent rally has also encouraged producer selling, with basis levels dropping accordingly. I suspect a pullback into the mid-440's may be in the cards.

 

M. Steven Morgan

www.commodityreview.com

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