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ROSENTHAL COLLINS FUTURES
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800-624-6572(March 15, 2000) SOYBEANS: Can you kill a crop in March? Certainly not! Can you calculate "drought odds" in March based on current moisture conditions? Of course, and many analysts now figure they've gone from the normal "1 in 20" to "1 in 4", and we feel that's worth going after, especially at 25-year lows with the broadest worldwide demand base we've ever had.
FUNDAMENTALS AND OBSERVATIONS--1.) Rain In The Wrong Place--Rains fell in South America delaying harvest but not much in our own farm belt which really needs them.
2.) Technical Breakout--This week, corn and beans took out their February highs!
3.) Warmest Winter On Record--Confirming a warmer and drier trend which began lat fall and in many areas last July.
4.) Tell Us Something We don't Know!--On Monday, the NOAA expressed concerns about a possible drought in the Nebraska- Iowa- Illinois-Indiana areas this summer, which catapulted the market to a two-day rally. Gee, the government is just noticing how dry it is?
5.) March 31 Planting Intentions--The first numbers of the year on the "2000 crop!"
6.) March USDA Supply/Demand Report--Reflects U.S. bean exports to be the second highest ever!
7.) May Corn--Posted a six-month high on Tuesday leaving two upside gaps in the process. A weekly close above 235 would be impressive technically.
There's an old expression "looking bad all the way up" and this aptly describes the action in May beans, especially last Friday. After good Thursday exports and a positive supply/demand report on Friday, the market went to the highs of the week, failed, and then proceeded to take out the lows of the week, also closing down there. Technicians, of course, would be reluctant to buy that kind of close as would fundamentalists noting that the market made new lows late Friday on good news. But the market had a different idea and opened higher Monday and proceeded on a two-day twenty cent run-up.
There is also a wide-spread belief among producers that options never work and always expire worthless. This may be true in a trading range market, but in a market that you expect to move at least fifty cents they provide an excellent vehicle for trading with no margin call, limited risk (what you pay for them) and great staying power against the inevitable "weather swings" we will experience this spring and summer. And they're a heck-of-a lot cheaper than drought insurance!
William D. Moore
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