wmeubank@ocp.kcmo.com
(May 5, 1997) WHEAT: Rains in Europe are almost certain to result in EU resumption of exports (hopefully they will not be subsidizing). Maybe a reduced Canadian crop (there could be 3 to 5 mil. acres flooded out), or more talk of European drought later this season would help fuel a rally. But as long as the U.S. corn growing weather looks good, we think is will be hard for wheat to rally as total world coarse grain stocks will build. Yet we are not desensitive to weather. But it will have to be proved to me damage before it rallies. We took profit on our short trade today, would re-sell a rally and remain 100% hedged. We recommend that you roll your wheat hedges to Dec. The premium for Dec. is now at 20 cents. At 21 cents, we pay you 1 cent month storage, 9% interest and 1 cent commission to store wheat until Dec. In doing so, you gain 5 months in which we might see some basis strength.
MONDAY"The 6-10 day is bullish corn and beans as it is wet. However, most traders are watching dryer private forecasters who are bearish. This week's rally in beans was demand driven. As long as support holds, the buying will continue. Thus, simply watch to make sure support holds in beans. Sell corn/wheat.
Bill Biedermann
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