wmeubank@ocp.kcmo.com
(May 8, 1997) CORN: The trade during the past week in the corn sector was mostly weak as the market continues to find pressure from worries that the upcoming U.S. crop could be large enough to alleviate all supply problems world wide. The export front was better from a week ago as Japan made some large purchases, but the overall pace still seems to be in a declining mode due to fairly high prices and promise for a more plentiful supply world wide in the next couple of years barring any bad weather possibly hurting growing patterns. Overall, internals are mixed to a bit weak as the market seems to be looking ahead to the possibility that supplies will not be all that tight. Just remember that the USDA indicated on the first planting intentions release for the year that farmers intend to plant 81.4 mil. acres which is up 2% from a year ago and 14% above 1995. The figure would be the largest planted corn acreage since 1985. If the latter does materialize it would generate a near record crop which would more than likely ease all supply concerns and will eventually have negative implications on this sector as long as weather does not play havoc with the upcoming crop. Technically, July corn is in an uptrend; the trend would turn down on a close below $2.95<$E1/4>.
FUTURES STRATEGY--Short CN at $3.10. Move protective buy stop down to $3.12<$E3/4> on a close only basis.
OPTION STRATEGY--Short the CN $3.10 calls at $.10. Maintain protective buy stop at $.25.
Tony Montini
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