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KLEIST CONSULTING
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312-648-2233(March 16, 2000) SOYBEANS: THE EMPEROR HAS NO CLOTHES?--Since I spent a great deal of ink in the corn commentary backgrounding what I call nearly a "government sanctioned drought outlook," I will just use "drought" to keep it shorter. The beans as I go to press have joined with the corn on the drought bandwagon and shot up over 25 cents in less than a week. Fund buying was heavy in both the beans and the meal while funds were short covering soy oil initially. And of course the street joined in the buying and the hedgers exited hedges. While basically no bean seeds have been planted either, perception is everything. We will need a whale of a drought it seems to get to some of the lofty levels the touts are predicting. A mild drought just will not cut it., it seems. Before all this, bean acreage was set to rise by 1-2 million aces. Will a pre-season fear of drought tilt even more acres? Well, no worry about that for now. However, currently there has been some large coverage but light amounts of precipitation in the mid west and current, near-term forecasts not overly hot and dry. If so, will some other fundamentals matter? The monthly NOPA crush again showed a large drop in the crush, but also showed another increase in soy oil stocks. The recent Export Sales report was rather poor, and that when prices were 25 cents lower. How will they fair now? Even as I know that's not what the market is trading, it still is important to not get too far ahead of ourselves. A stair-step weather bull would be best and with the calendar where it is, with the dip in demand, with the scatted rains around et al, there remains room for corrections. Or better said, reality checks.
John W. Kleist
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