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A neutral-to-bullish soybean outlook

Soybeans: Today's action was choppy and thin. In fact, the trade volume was comparable to holiday trading coming in with a volume of only 36,353 in the May contract. Today saw the release of two acreage estimates. First, was our acreage estimate of 79.10 million acres. That comes in 1.7 million more acres that what we saw last year. A second private estimate was released during trading that came in at 78.63 for a 1.2 million increase.

Many in the trade were likely looking for a larger number from that second estimate. After that was released, there was a small recovery and then a larger recovery on the close. Again, in small volume it would not take much fund buying to give us that late day bounce. This should not be looked at as late fund buying. It is more likely that a few big traders may be looking for disappointing yield numbers from South America over the weekend. In the end, beans made it through tough outside markets and a bearish day of acreage reports while closing higher. What we still need to see next week is a higher move on rising open interest to see a longer term bullish run. Next week we will watch US weather and South American harvest numbers for our direction. This past week we did break a down trend line to close the week strong. All of this happened without much help from fund buying. Just imagine where we could go if they were to step back into grains.

Direction: We remain neutral to slightly bullish. There was early choppy trade with late buying found on thin volume. Beans will eventually need fundamentals backing it up or it will give up ground soon...Ryan Ettner

Working Trades:
· (03/01) Sold May 930 put/sell May 1030 call 32 3/4, risk 58, objective 0. Closed 20.
· (03/18) Bought May 954, risk 942, objective 977. Closed 961 3/4.

***Disclaimer*** The commentary and trades below are derived from technical indicators provided in our Allendale Advanced Charts pages and may not correspond with the fundamental commentary above.

Advanced Charts Direction: Beans settled the week above the 50 day MA, but still well within the current trading range. The 38% retracement level is still providing solid resistance near 975. We are short from 960 since its near the top of the range…Monica Moehring

Vital Technical Indicator: The next projected major turn day for soybeans is March 23, soybean meal is March 26, and soybean oil is March 23.

Closing Cattle Commentary

Live Cattle: Cattle futures certainly closed disappointingly today. Both June and August futures made strong gains early on but closed almost unchanged. Based on this close it is likely next week you will hear people talking about a potential top. In discussion with one reporter this afternoon, he raised an old adage that applies to this market. "A bull must be constantly fed but a bear can take care of himself." That is a phrase used to describe how bull markets must be fed a constant stream to good news. For the past weeks we have had that stream of news. Hopes on exports, poor growing conditions in feedlots, and strong wholesale beef has been the talk almost every day. This market has surpassed pretty much everyone’s expectations for spring pricing.

Feedlot Placements: Both Allendale and the rest of the trade were looking for moderate decline in placements during February (-3.4% and -2.0% respectively). We knew the poor weather last month would discourage new placements. These projections were made even though lower corn prices and rising cattle prices would indicate renewed bullishness. USDA indicated they were down 0.8%. Cattle placed in February are marketed from July to October so it could be lightly bearish to deferreds. In the big picture there are now four months in a row of lower placements. Next month, slaughters may fall back to even with last year then tighten in the summer.

Feedlot Marketings: We knew marketings would be a little higher than last year. We are still working off those larger fall placements. We had guessed marketings would be 2.1% larger while the average trade guess was similar at a 1.9% gain. USDA joined our thoughts with their own 2.1% increase.

Feedlot Population: With fewer placements and more marketings the supply of cattle in feedlots tightened from 2.7% smaller on February 1 to 3.2% smaller on March 1. This number was right on the average guess and close to Allendale's 3.5% smaller estimate.

Direction: Before you ask, we will tell you…we are not calling a top yet. We still have cash cattle trading for later this afternoon to run through. We will clearly point out, we see little chance of cash cattle ever reaching the levels these futures are implying. Yesterday we pointed out what happened in the last weather market. After a $12 rally from December 1 to March 8, the June 2007 contract fell a sharp $14 price break into expiration! Also consider the fact that cattle feeders are NOW placing cattle like no tomorrow. With weather being a little more manageable in the southern plains, we are getting some bulled up feedlots taking action. For speculative trading today's weak close on the charts makes us itch to sell but we will hold off. For hedgers, keep those positions on. As of Monday’s open we are selling the remaining 25% of expected marketings through August. We will also start sales on the October and December contract. See the Hedge Advice page for more information…Rich Nelson

Trading Recommendation:
· (03/19) Stand aside.

***Disclaimer*** The commentary and trades below are derived from technical indicators provided in our Allendale Advanced Charts pages and may not correspond with the fundamental commentary above.

Advanced Charts Direction: The bulls are in full control of the cattle market right now, pushing it to another new contract high today. Light volume continues though, so we must be cautious with any long positions. Instead, we will place a sell stop at 96.50…Monica Moehring

Vital Technical Indicator: Next projected major turn day for live cattle is March 24 and for feeders is April 1.

Rich Nelson
Director of Research
Allendale, Inc
4506 Prime Parkway
McHenry, IL 60050
800-262-7538

Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or adhere to a particular trading program in spite of trading losses are material points which can adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.

Soybeans: Today's action was choppy and thin. In fact, the trade volume was comparable to holiday trading coming in with a volume of only 36,353 in the May contract. Today saw the release of two acreage estimates. First, was our acreage estimate of 79.10 million acres. That comes in 1.7 million more acres that what we saw last year. A second private estimate was released during trading that came in at 78.63 for a 1.2 million increase.

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