Just when I thought I could see light at the end of the tunnel for soybean prices, recent global supply-demand reports show that soybean ending stocks are increasing again. A series of minor changes is adding up to another big increase in ending stocks.

The biggest culprits are the record U.S. crop and a projected 90 million-bushel drop in global soybean demand. I want to emphasize the word projected because year-to-date usage figures do not show this slowdown.

Just over two years ago, global ending stocks dropped to 474 million bushels. The stocks-to-use ratio was down to just 7.5%, and the global economy was roaring along. Soybean prices on the Chicago Board of Trade advanced to just over $9/bu as prices went up to allocate scarce supplies. By 1997, soybean production had increased; global ending stocks went up to 701 million bushels, and the stocks-to-use ratio increased to a more comfortable 10%.

This year, ending stocks are likely to surge to over 800 million bushels. This will create a 12% stocks-to-use ratio for global soybean supplies. It's a buyer's market with worldwide soybean buyers purchasing on a hand-to-mouth basis as large new-crop supplies keep coming on each month.

Does this mean prices are going to stay cheap forever, and U.S. farmers will have to live with $4.50-5.50 cash soybeans?

Not if one or two fundamentals change. First, watch for improved demand from Southeast Asia. Its stock markets have already made an impressive rally, and if the general economy can start to improve, food consumption and soybean and feed- grain imports will increase as well.

The second key that could change in 1999 would be any weather problems that impact soybean crop development this spring or summer.

Either of these fundamental changes could put a 10-20% rally into the soybean market. If both hit within six months, a $1/bu or more rally could happen. With new-crop soybean prices at or below the county loan at most locations in the U.S., you don't have any downside price risk in the cash soybean market.