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SUE MARTIN COLUMN: Soybean estimates up; farmers switching acres back to corn

Lots of bad news, lots of bottoms? That is how this week appears at the end. First it was the shockingly high soybean acres estimate, up 18 percent, but still down 1 percent from 2007 to '08's total decline. While hedge funds were liquidating Apr...

Lots of bad news, lots of bottoms? That is how this week appears at the end.

First it was the shockingly high soybean acres estimate, up 18 percent, but still down 1 percent from 2007 to '08's total decline. While hedge funds were liquidating April 1 and weak longs throwing in the towel, a potential spring low was being priced in on March 31 night's session near 90 cents lower.

Commercials were buyers nearly every day through week's end. As the Argentine farmer's strike came to an end, the stevedore strike began at the Brazilian Port of Paranaqua. There are three more ports that the strike may spread to the week of April 7. While export sales of soybeans did not gain much with the Argentine strike, sales for soyoil grew sharply. I heard estimates of as many as 70 vessels waiting to load in Argentine ports. Now, with the strikes in Brazil, more business may be switched to the U.S. as Brazil tends to export more whole soybeans as opposed to the exports of soy products from Argentina. By the way, Argentina is the world's largest exporter of soyoil.

After the release of the U.S. Department of Agriculture's prospective plantings report, farmers decided to switch acres back to corn. I suspect that with the help of decent spring weather, Iowa, South Dakota, Minnesota and Nebraska farmers will switch 1.5 million to 2 million acres back to corn. Spring wheat acres are fighting once again as well. One cooperative told me that it already had 10,000 acres switched this past week in its area. More important for the soybean market is the demand side of this market. Brazil is nearly 65 percent sold ahead. Sales are more aggressive this year, and that should bring the world back to the U.S. sooner.

In this coming week's USDA supply and demand report, I look for the export figure to be increased while seed and residual usage maybe lowered. The overall result is that the carry-out should show an increase. I suspect we are on a corrective rally that with the "V" bottom, should attack the 1,372 high from the last week of March. If that high is exceeded, then the move could become more dynamic. The food inflation in China and India as well as other nations, should stimulate incentives to rebuild reserves and vegoil will be a major part of that buying. So don't throw the towel in on soyoil yet.

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Like the soybean market reversing on the bearish news, cattle and hog futures appear to have found a bottom as well. Word by April 4 of a large pork producer filing bankruptcy, wholesale beef prices appearing like it was stabilizing and pork wholesale prices bottoming may have been the basis for the hog futures to see nearly two days of limit up price moves while, fat cattle prices rallied $2.50 or more from the lows. Basis the June, 8,675 was the fourth count down and 8,665 was the low. Placement activity should decline this spring and feedlots are losing large sums of money per head.

More incentive to the placements is slowing. This should be a good weekend for grilling.

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