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A good week

Agriculture.com Staff 05/18/2007 @ 2:33pm

This week's rally in the bean market was a bit of a surprise, considering new positive news was lacking.

Since bottoming in April, prices rallied close to 70 cents in most futures contracts. An outstanding demand picture for soybean oil continues to pull prices into new contract highs and, in turn, add strength in the soybean pit.

The last time soybean oil was above 34 cents per gallon, bean prices traded over $10. However, that does not necessarily indicate that bean prices will move higher than where they are currently priced, near $8.25. The demand for oil is strong and will help provide support, but record soybean carryout, both in the US and world suggests that a substantial rally from here is not that likely.

In addition, soybean meal will be a laggard. Meal competes with distiller's grain, which will be more and more available to the market in the year ahead. Soybean prices, especially new crop November, are priced at 19-year high levels. The last time November beans rallied above $8.00 was in the drought of 1988. Therefore, expectations for higher bean prices, based on current supplies, are probably unwarranted unless weather or disease becomes an issue. 2008 could be a different story, but this perspective will concentrate on 2007.

So what does it mean? The bounce in bean prices the past week and a half is providing farmers an opportunity to sell old crop. In addition, if you have not made new crop sales, this is your chance to get started. As we have suggested in the past, your first sales are hopefully your worst. If selling new crop beans with November futures above $8.00, could be one of your better problems for 2007.

If you have any questions or comments, please contact Top Farmer at 1-800-TOP-FARM, ext. 129.

This week's rally in the bean market was a bit of a surprise, considering new positive news was lacking.

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