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TIGER ON SPREADS
P.O. Box 64401, Chicago, Illinois
800-368-5958

(March 18, 2002) CORN: Trade has been muted on the Chicago Board of Trade. Supply/demand remains in equilibrium. Seasonal lows are often generated in the current time frame, but there is little to sustain a subsequent up move even if a low is made.

Corn is quiet and more weak than strong. There continues to be more bullish hope than fact. Witness the continuing talk of the return of El Nino and potential accompany weather disruptions. This could also potentially affect new-crop beans--if anything happens at all. For now, all crops look bigger with the exception of wheat where the problem is one of a lack of demand in spite of reduced supplies.

The spreads are beginning to turn. Carrying charges limiting any widening but so far there has been insufficient positive news to generate any significant tightening. Hold the one unit of long old-crop July/short new-crop December corn from 12 cents December premium. Activity should pick up after mid March.

Wheat/corn spreads have slipped a bit on wheat weakness. Wheat has been suffering from a lack of demand while corn has been suffering from too much supply. Longer term, the long December wheat/short corn spread could provide an opportunity if it can first decline to below 60 cents (currently near 65 cents) wheat premium. A move to 80 cents + wheat is the first objective for this one.

 

Phil Tiger

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