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Soybeans.

Position Monitor
 '07 crop '08 crop

Cash-only: 50% 0%

Hedgers (cash sales): 65% 0%
Futures/Options 0% 0%


GAME PLAN: It's recommended you get current with advised sales for 2007-crop. So far, the market has shown the downside is limited to corrective selling. Therefore, urgency to increase 2007-crop sales is low at this time. But, cash-only marketers should be ready to get to 65% sold on 2007-crop, while hedgers should be prepared to increase 2007-crop sales with hedges on signs of extended price pressure.

Fundamental analysis

Soybean futures faced heavy selling pressure to kick off October. But no serious technical damage was done, signaling the sharp pullback is nothing more than a bull-market correction--so far. Seasonally, soybean futures typically struggle to find buyers as harvest hits full stride. But if yields remain on the disappointing side, seasonal pressure will be limited. Plus, there is concern with dryness across much of Brazil and Argentina's key production areas. As long as funds are content with being heavily long the market, the market's near-term focus will remain on securing enough acres--both in South America and domestically--for the 2008 crop to rebuild ending stocks. But a sudden switch in attitude would trigger an extended sell-off and leave the market susceptible to heavy fund liquidation.

Daily November Soybeans

Trend is still higher.

A climb back into the steep uptrend from the August low would put bulls' target at the contract high of $10.17 1/2. Longer-term resistance lies at the 2004 high of $10.64 on the weekly chart. Futures violated the steep uptrend and spiked support at $9.49 1/2 to do some technical damage. But the pullback marked only a 38% retracement of the rally from the August low to the contract high -- a typical bull market correction.

Daily March '08 Soybeans

Trend is still higher.

Contract-high resistance is at $10.41 1/2.

The pullback from the contract high is just a correction at this stage. Consecutive closes below $9.71 1/2 would signal extended pressure is likely.
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Publication:Pro Farmer
Date:Oct 6, 2007
Words:339
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