Pricing soybeans was a lot easier last year. In 1997, prices rallied in a demand-driven bull market. They hit our scale-up objectives as cash basis bids improved.

This allowed our farm customers to make orderly sales, feeding the bull market with incremental sales until prices peaked in mid-May. The $8.50-8.80/bu Elliott Wave projection hit reasonably close to the top and provided producers with good income on their 1996-crop soybeans.

In this marketing year, you have two fundamentals to factor in. First, we have witnessed a slowdown in export demand due to the financial crunch in Southeast Asia.

The second factor is increased competition from South Americans as they harvest a record soybean crop.

Last year, we used the Elliott Wave projections for price targets to make sales. This year we believe price retracements are the right tool to use. This means that our price forecasts suggest a lower high than last year's $9 Chicago Board of Trade (CBOT) futures price and we recognize the need to get old-crop soybeans sold in the next 30 to 90 days.

Soybeans have a large open interest and a lot of speculative trading activity because prices really move. It can be very depressing to watch prices fall sharply day after day, as occurred in the middle of February this year.

Hold on, though. When soybean prices plummet prior to planting season, some weather scare usually comes in to rally them back again. Long-term odds suggest that soybean prices will retrace 38% of a major price move at least 60% of the time, 50% of the move half the time, and 62% of the move about one-third of the time.

Review the May CBOT futures chart to the right. From the Nov. 11 high at $7.52, prices dropped sharply lower to the Jan. 12 low at $6.62. The total down move was 90 cents per bushel.

To figure out the retracements, take 38% of the 90 cents down move. That's 35 cents. Add 35 cents to the $6.62 low for the first objective at $6.97. The rally in mid-February did take prices up and through that objective.

A 50% retracement would be a 46 cents rally, setting up a $7.08 objective, and a 62% retracement would take prices up 57 cents, creating a target at $7.19 May CBOT futures.

Because so many chartists and traders watch these key price areas, these price levels will become resistance on any rally.

What should you do now?

First, focus on your local basis level. If it has improved during the recent down move, fix your basis level and get your cash soybeans hauled in. This will save time down the road when you get busy with spring fieldwork, and you'll know exactly how many soybeans you need to price.

Second, expect a volatile return rally during the spring-summer weather-scare period. In a volatile market, it's more important than ever to have your offers in place. Consider pricing part of your remaining inventory when May CBOT futures rally to $6.97-7.08, and if you get a chance at $7.19, get 80-100% sold.

You are coming into the time of year when you want to get remaining cash soybeans sold and begin getting some new-crop priced as well.