"Should I be nervous if I took the LDP (loan deficiency payment) on all of my soybeans last fall and did not sell any?"

That question was from a producer in northern Illinois who was obviously very nervous. He should be nervous, unless he's willing to hedge some or buy some puts to cover his downside risk.

The Monthly Chicago Board of Trade (CBOT) soybean continuation chart (see printed article) shows the hard down move from the early February 1998 high at $6.93 to the Sept. 1, 1998, low at $5.12. This appeared to be a major long-term low as prices rallied back into Thanksgiving, making an almost perfect 50% retracement to the $5.94 high.

In early January 1999, commodity deflation continued. The Commodity Research Bureau (CRB) index fell to new lows and soybeans dropped lower, taking out the September 1998 low. That movement opened the door for a further down move in soybean prices.

The next major support for CBOT soybean futures on the monthly chart (see printed article) is at the early February 1999 low at $5.03 and then the August 1986 low at $4.67. If futures fall to $4.67, producers who took the LDP too early and did not sell could end up with less than loan prices.

Looking at the short- and long-term price cycles, we have pegged three key weeks to watch this year for a major change of trend. Note these key weeks:

* The week ending Mar. 19.

* The week ending Aug. 27.

* The week ending Nov. 5.

What could cause these lows? The March low could be tied to acreage intentions or weather problems in the U.S. The late August low would be on the anniversary of the 1998 low. This is a key time to watch every year for a change in trend. The low in November could be very low if a big crop is harvested and the LDP program is used by farmers on 1998 and '99 soybean crops.

As a farmer said at a recent seminar, "I don't need help with the lows - I can find them on my own. What about the highs?"

Seasonal odds suggest better pricing opportunities from mid-April to early July. What can make the rally happen? I don't hold much hope for improved demand from Southeast Asia until late 1999 or the year 2000. Rallies this spring and summer will likely be tied to weather scares that threaten the U.S. crop.

What to watch for: Review the monthly CBOT soybean chart. It shows that you've had the chance to sell soybeans at $6 or higher in 20 out of the last 20 years. And you've had the chance to sell futures at $7 in 12 of the 20 years.

History shows it's dangerous to get too bearish when soybean futures are trading at around $5/bu.