The media has focused on the Corn market this year, with burgeoning ethanol demand and rising feed usage leading to a surge in prices. However, traders should consider taking a look at the Soybean market this summer, as lower US planting intentions and increased usage are setting the stage for extremely tight ending stocks this year. The USDA estimated US Soybean ending stocks for the 2007-08 crop year at 320 million bushels, or nearly half of the 610 million bushels for the 2006-07 season. If these figures play out, the stocks-to-usage ratio would fall to 10.5%. Demand is expected to show a moderate increase to 3.039 billion bushels versus 3.032 billion bushels this year. Soybean Oil demand is expected to increase, with its use in biodiesel production forecast at 3.8 billion pounds, up from 2.55 billion pounds this year. Assuming ideal growing conditions this summer, US Soybean stocks should be adequate. However, there is little room for error this year, and unless South American producers make up for any shortfall, the potential for higher Soybean prices is likely.

Looking at the daily chart for November Soybeans, we notice prices falling modestly in overnight trading as the weekly crop progress report showed that 32% of the US Soybean crop has been planted versus 31% last year, and just above the 5-year average of 31%. This was towards the high end of trader estimates and caused some minor selling overnight. Soybean emergence is running slightly behind average, coming in at 6% emerged versus the 5-year average of 8%. After reaching 1-month highs yesterday, Soybean futures were poised for some profit-taking selling, and the crop progress report was the catalyst. Bean prices still remain well above the 20-day moving average, and momentum as measured by the 14-day RSI is reading a bullish 66.42. Yesterday's highs of $8.04 3/4 are now seen as resistance for November Soybeans, with support found at $7.88. At the end of the after-hours session, November Soybeans were trading at $7.95, down 4 1/2 cents.

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