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877-853-2202(March 30, 2000) SOYBEANS: Soybeans held up rather well this week considering the collapse in corn. Overall, prices are generally finding support form the outstanding pace of exports and the delay in Brazil's harvest. Reports indicate 24 percent of their crop is harvested which compares to 35 percent at this time last year. This delay should help keep demand for U.S. soybeans strong until their crop is available for export. The Planting Intentions Report will probably have some surprises later this week but is expected to show an increase in acreage from last year. Depending upon the size of the increase, we are probably "staring" at ending stocks in excess of 500 M.B. Furthermore, considering the size of South America's crop, the market appears headed to a new contract low basis the new crop months unless a major weather related development threatens the Midwest. Further overhanging the market is the fund long position of 170 M.B., including options, which is a rather sizeable position based upon the present fundamentals. Export inspections were above estimates at 23.6 M.B. with cumulative totals running 21 percent above last. Total shipments to date are 78 percent of USDA's target of 910 M.B. Sales totaled 270,000 tons, down 32 percent from the previous week. Last week's comments mentioned July soybeans needed to hold 529.5 to keep the outlook intact for a rally to 555. This level has held, thus far, and prices are still on track to reach the target unless 529.5 is exceeded. Time-wise, the market is expected to top around April 4. However, once the target is reached, the wave structure shows we are probably "wrapping up" the advance from the December 13 low at 465 and a sell-off near 500 can be expected. November soybeans are on course for a rally to 565 unless 538 is broken and a top is expected in the same time frame as the July contract. However, from here, the market will be subject to a decline near 515. Producers need to be aware that unless the well advertised "drought of 2000" develops, the price of new crop soybeans may eventually have a "3" attached to the front!
Dewey Strickler
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