Soybeans at $8.80 sound ridiculous? Maybe so — but while the world concentrates on the bull market in corn, the real bull market is taking place in the other grain pit — soybeans.

While the press concentrates on the increased use of corn in ethanol plants, little is being said about the insatiable appetite China has for our soybeans and soybean oil. Worldwide demand for oilseeds is increasing sharply.

Surplus to shortage

The United States and the rest of the world are sitting on near-record supplies of soybeans this year. USDA estimates that at the end of this year, 575 million bushels will be leftover, compared to only 449 million a year ago and 256 million bushels two years ago. That's more than double the supply in two years.

The good news is that the bad news is known. Our estimate is that carryover supplies will be closer to 543 million bushels from Sept. 1. The real issue is what happens after that.

Soybeans and cotton are going to lose in the acreage battle this spring. Corn is going to be the big winner.

Last year U.S. farmers planted 75.5 million acres of soybeans. Our estimate is that only 70 million acres will be planted this year. With a trendline yield of 43 bushels per acre, that translates to a crop of 2.97 billion bushels in a year when we will likely use nearly 3.2 billion bushels.

All of a sudden what was a large carryover supply drops into one with only a narrow margin — in the low 300 million bushel range. Peg the carryover at that low level, and soybeans sometime in the next few months will have an 8 up front rather than a 7.

Technical indicators

As the market exploded in January, November soybean futures left a huge gap in the charts following the January crop report that many technicians are certainly staring at. The gap was left at $7.40, the base of the move started in September at $6.00 — that translates to an upside objective of $8.80. Impossible? Not really.

The important issue in soybeans as well as in corn and cotton this coming year, however, will be more of timing rather than price. Markets always peak when the news is most bullish.

This market is in a fight over acreage — which means the odds are high the top in all three markets could occur before spring planting is complete.

Be ready

The most important thing to remember over the next couple of months, while you are concentrating on spring planting is don't forget spring selling.

Markets present opportunities that are only worthwhile if and when you take advantage of them.

In almost all cases, when markets offer profit opportunities in the spring it has paid big dividends to take advantage of them.