You are here

Technicals send CBOT soybean futures to highest levels since 1973

It's been longer than three decades since the soybean market has reached levels it reached in Friday's trade, when the CBOT January '08 soybean contract settled at $11.00 1/4. Soybean futures hit $12.90 per bushel in August 1973.

The soybean bullishness spilled over to the wheat and corn markets, buoying both to sharp gains. Wheat briefly limited up, according to Dow Jones Newswires, while the March CBOT corn contract settled 7 cents higher at $4.05 3/4 per bushel. The March '08 wheat contract settled the day at 19 1/2 cents higher at $8.64 1/4, while the MGE March wheat contract finished 15 3/4 cents higher at $8.90.

Friday's big move in soybeans may just be the beginning, market-watchers and forecasters say, as techincals may foreshadow a continued soybean climb -- especially weather conditions in South America, where soybean planting is still underway. Despite recent moisture, dry weather may be on the way. This forecast could be reason to buoy domestic soybean prices further, according to Freese-Notis Weather, Inc.

"After the rain that falls this weekend through early next week, all but far northern parts of the Brazilian growing region could see very little rain through about December 3 (at least). Given how wet it was earlier this month, soils in southern Brazil are in good shape right now and this period of dry weather is going to allow a lot of planting to get done. However, we all know how quickly the sandy soils of southern Brazil can dry out, so this is something to keep an eye on," according to Freese-Notis on Friday. "With the soybean market perceiving such a need for a big South American soybean crop this year...this could start to get some market attention before long."

These conditions may have already gotten all the attention needed. Agriculture Online Marketing Talk member patriot says it's just one reason he sees continued strength in the soybean market. Further, this could be even more ammo in the battle for acres developing in the U.S. that's expected to continue through planting next spring.

"I'm not a techie, but the fundamentals look great. South America's not off to a great start, there's a lot of nitrogen being applied out west and [soybean] pipeline numbers for '08 carryout all add up to a nice bull run," patriot says. "I look for a chance to see the all-time highs challenged if we get an all-out acreage war started. There's a lot more reason for upside than downside right now."

While the general outlook for soybeans may be bullish for the near term, it's unlikely current price levels will touch the 1973 record in terms of real dollars. While this may be out of the realm of possibility, that doesn't mean there's not still room for considerable value gains in the market, says Marketing Talk member especially given current fundamentals like the South American weather situation. And, the price hike may not end in beans.

"Beans in the 20s are possible if we have a weather crisis in South America," he writes. "Corn would probably be about $8 [per bushel]."

It's been talked about a great deal in recent months: The jump in soybean demand created as a larger percentage of the population of China accumulates enough wealth to comsume more meat, thereby creating more soybean demand. Looking ahead, it's clear this will become a major fundamental in the domestic market.

But, is the market already feeling bullish pressure from the bump in Chinese soybean demand? Some Marketing Talk members say it has, and it could have major ramifications that will require major attention in farm management plans.

"I think it is more a logistics problem than an acutal production problem. We could dig our selves out of a supply hole in a hurry, because through history farmers have over-produced when offered good prices," writes Marketing Talk member Andy EMI. "This time, it will be difficult to overproduce because we can't get our hands, or have alot more hands trying to get, the available nutrients to grow a monster crop.

"Keep your eye on the ball, because these next years will do a lot more to weed out the weak managers than the low price years did."

It's been longer than three decades since the soybean market has reached levels it reached in Friday's trade, when the CBOT January '08 soybean contract settled at $11.00 1/4. Soybean futures hit $12.90 per bushel in August 1973.

Read more about