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(March 26, 2002) SOYBEANS: As expected, soybeans chose the high road to travel in March and this has brought the May contract within a gnat's hair of the important fifty percent resistance at 4.77. That price will surely be a limiting factor in the days ahead and timing features also cast a bearish shadow. April is the third month of advance and that tells us the high for the month will occur early. As it happens, seasonal pressures are usually bearish in the first half of April. This combination of time and price tells us to be sensitive to sell signals that occur now as opposed to later. A simple fifty percent correction will allow nearby beans to slide back to 4.45. At that point we must take another look.

SOYBEAN MEAL--Nearby soybean meal is just now nosing against a down trend line that began in December of 2000. This is not a hard spot in the road, it is more like a boulder. Couple that with a bearish three up monthly cycle in April and the prediction for lower prices is an easy one to make. Unfortunately, it gets worse! If nearby meal comes down far enough to test the 146 area, it will be the fourth time down to that old support. As you know, the fourth time is usually successful in penetrating to new lows. If that happens, a path will be cleared for a probe of the 1999 low at 120. The one fly in this bearish ointment is that seasonal patterns are friendly in April and that might be enough to buffer selling pressure into a sideways type of action. Either way, the odds favor lower prices, it is simply a matter of degree that is debatable.

SOYBEAN OIL--May soybean oil ran up farther than expected during March, but when the seven week cycle hit the market, most of that gain disappeared. Although it is still on a dip, the month of April comes to us with the bearish influence of three up monthly timing. Mostly what we have is a large trading range between 1525 and 1725 over the last six months. It is always best to assume a trading range will continue until they finally break free.


 
Dave Norton

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