wmeubank@ocp.kcmo.com
(May 9, 1997) CORN: Exports were fair for the corn market, but weakness in beans and an abundant supply, combined with an anticipated large crop continues to weigh on corn. Funds continue to be sellers. Cool weather in the Midwest was also cited as supportive, as it suggests that corn will not germinate. However, ask yourself if it gets cooler or warmer this time of year. This is a rally that should be sold. We are still in an area that could spawn a reversal, however, so be alert. Also keep in mind that while most of the recent news is bearish, it's not much of a surprise. Sharp rallies could occur. Don't go on a cruise. Support basis July lies near 282-280 and 275. Resistance is 290-292, 295, and 298. It is conceivable that July corn is ultimately on its way to the mid-260's, but support in the low 270's should be substantial. Current rallies should be viewed as a selling opportunity. Sell July corn on 3-5 cent rallies or on rallies to 290-292 or to 295 if more conservative, with stops over 302. Most traders should take profits in the mid-270's. Sell December corn on rallies to 272-275. Support is seen at 265 and 262. Aggressive traders might buy in that area in the event of a weather-induced rally later in the year. Option traders should keep an eye on this selloff for buying opportunities in calls for the long term. Option traders should buy July puts on rallies, and if aggressive, sell July calls.
M. Steven Morgan
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